ARCHIVED -  Transcript / Transcription - 4 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 4, 2004 Le 4 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 4, 2004 Le 4 novembre 2004

PAGE / PARA

PHASE II

INTERVENTION BY / INTERVENTION PAR:

Catholic Youth Studio and the 904 / 5212

Oblate Fathers of Assumption Province

Canadian Independent Record 915 / 5264

Production Association

CKUA Radio Network 951 / 5407

Canadian Recording Industry Association 974 / 5526

Society of Composers, Authors and 995 / 5627

Music Publishers of Canada

Canadian Music Week 1012 / 5688

SONOGRAM 1021 / 5730

l'ADISQ 1045 / 5879

Rob McArthur 1068 / 5979

Patricia Silver 1087 / 6078

Forerunner Global Media Inc. 1094 / 6116

Indie Pool Inc. 1101 / 6146

Just for Laughs 1110 / 6203

David Bray 1115 / 6225

Ben Miner 1122 / 6261

School of Creative and Performing 1126 / 6294

Arts of Humber College

Susan Aglukark 1131 / 6339

Jeff Healy 1133 / 6356

PAGE / PARA

PHASE II (cont.)

INTERVENTION BY / INTERVENTION PAR:

Frank O'Dea 1139 / 6393

National Campus and Community 1143 / 6418

Radio Association

CHIN Radio International 1165 / 6482

PHASE III

REPLY BY / RÉPLIQUE PAR:

CHUM Limited and Astral Media Radio Inc. 1172 / 6504

Canadian Broadcasting Corporation and 1207 / 6633

SIRIUS Canada

Canadian Satellite Radio Inc. 1238 / 6770

Gatineau, Quebec / Gatineau (Québec)

--- Upon resuming on Thursday, November 4, 2004

at 0930 / L'audience reprend le jeudi 04 novembre 2004 à 09 h 30

5205 THE CHAIRPERSON: Order, please. À l'ordre, s'il vous plaît.

5206 Good morning. Bonjour.

5207 Mr. Secretary, would you call the next item, please?

5208 THE SECRETARY: Thank you, Mr. Chairman.

5209 But before I do, for the record, I would like to indicate that intervenors number 4, the Canadian Music Publishers Association; number 7, Mr. Dan Kurtz; number 22, Samantha Parton; and number 25, Veda Hille, will not be appearing. Those interventions will remain on the record as non-appearing interventions.

5210 So we will hear the Catholic Youth Studio and the Oblate Fathers of Assumption Province, Mr. Kenning Marchant.

5211 You have 10 minutes to make your presentation.

INTERVENTON

5212 MR. MARCHANT: Good morning, Mr. Chairman, Commissioners.

5213 Catholic Youth Studio has produced Catholic radio in Toronto on AM 530 for the past 10 years. It has been an applicant before you for a full FM licence.

5214 The missionary oblates have made a distinguished contribution to Canada for over 150 years. They help negotiate treaties with First Nations. They founded the University of Ottawa. The Queen of Apostles Renewal Centre has been a centrepiece of the ecumenical movement in Canada for 40 years. A current priority of the oblate fathers is the expansion of Catholic radio and religious radio, generally.

5215 They are partners with other Catholic media, including Salt and Light Television and the Social Communications Committee of the Canadian Conference of Catholic Bishops.

5216 My brief is in three parts: one, the applications; two, religious programming and subscription radio; three, access for Canada's largest denomination, Roman Catholics.

5217 The three applications before you are not ordinary applications for broadcast undertakings. They are applications for programming control of two entire sectors: satellite radio, in the case of XM, CSR and SIRIUS, and national digital radio, in the case of CHUM-Astral.

5218 I submit that the CRTC would not licence the Canadian cable line-up to, say, Viacom as long as a few Canadian channels were included. That would be very difficult to reconcile with the objectives of the Broadcasting Act. Yet, that is what CSR asks for satellite radio.

5219 The Commission wouldn't license all of direct-to-home television to, say, Turner Broadcasting simply on condition that they carry CBC, Radio-Canada and another Canadian channel. Yet, that is what the SIRIUS application asks.

5220 And the Commission would be unlikely to turn control of the FM dial over to a single programmer. Yet, that is what the CHUM-Astral application asks for national digital radio.

5221 We urge you to deny all three applications in their present form.

5222 We urge you, first, to call for submissions on satellite options, and then call for fresh subscription radio applications, applications that will make Canadian subscription radio like Canadian subscription television, whether cable or DTH, offering some non-Canadian services, to be sure, but a predominance of Canadian channels and a diversity of Canadian channels to reflect and connect Canadian cultural diversity.

5223 Some of this must await new technology. We submit that the advantages of getting the right structure for Canadian subscription radio warrants such prudence. For example, you have been told by applicants that a Canadian satellite for subscription radio is too expensive. However, our technical advisers say that a Canadian satellite partnering radio, video product, telephony and military uses could well be economically feasible, but it has yet to be explored.

5224 The satellite frequencies for Canada have the technical advantage of portability. This would support multiple uses in a spread-out country like ours. Indeed, if subscription radio is not available to support such a satellite, that would undermine viability for other uses.

5225 We urge the Commission not to limit the future options for Canadian subscription radio. As Lady Macbeth says in the closing act of Macbeth, "What's done cannot be undone".

5226 We urge the Commission, in conjunction with Industry Canada and Telesat, to invite submissions on future satellite options for Canadian needs as Industry Canada has just done in its October 21 public notice.

5227 With respect to national digital radio, we urge the Commission to retain licensing control of individual channels. This will ensure fair access for a variety of Canadian services. A single programmer should not control an entire radio sector.

5228 An important part of Canadian cultural diversity is religion. There is a wide variety of religious faiths in Canada. Whether or not we are religious people, religion is the source of many of our most important social values: respect for the dignity of human beings, caring for others, respect for the wisdom of those who have gone before.

5229 Now, and throughout the ages, the most beautiful music is inspired by two sources, human love and religious faith. They are not in contradiction.

5230 The best selling book of all time is the Bible.

5231 The Canadian Charter of Rights and Freedoms begins with these words:

"Whereas Canada is founded upon principles that recognize the supremacy of God and the rule of law."

It goes on to say:

"Everyone has the following fundamental freedoms: (a) freedom of conscience and religion...",

yet our broadcasting system is overwhelmingly secular in its program offerings.

5232 In most of Canada people can choose their favour music, news, talk or sports. What most cannot find on their radio dial is their faith.

5233 Catholic radio saw subscription radio as the answer to this. Subscription is about paid choice; however, people cannot choose if they do not have access. And when Catholic radio approached the applicants before you, we were told, "THERE IS NO ROOM AT THE INN".

5234 XM and SIRIUS already carry U.S. faith-based channels, but there will be no place for Canadian religion. With respect, we think this is wrong. Subscription radio should offer a menu of Canadian religious channels, ideally, as many as can pay their way. At a minimum 5 or 10 in a 50- or 100-channel offering. Surely, 90 per cent secular is enough.

5235 Catholic radio argues for other faiths to be included for a very simple reason: it believes there should be collaboration and less isolation among religious groups. For example, our application for Catholic radio in Toronto included regular time slots for other faiths.

5236 This brings me finally to the access needs of Canadian Catholics. Roman Catholicism is, by far, the largest denomination in both French and English Canada. Roman Catholicism is also multi-lingual. Mass is celebrated in 35 different languages in Toronto each week.

5237 Almost 13 million Canadians identified Roman Catholic as their faith in the 2001 census. That's 44 per cent of the population.

5238 Catholic support and maintain local parishes across Canada. They support Catholic schools in every province. They support Catholic charities. They support Catholic events like World Youth Days or Catholic Radio's Gala Concert for the Papal Silver Anniversary.

5239 Roman Catholics need and would support national radio access in both official languages on digital or satellite or both. If even 1 per cent of Catholics subscribed, that would be 130,000 subscribers. We think some multiple of that is more probable.

5240 So Catholic radio would provide significant lift to any Canadian subscription radio service, so would programming for other faiths. And Catholic radio has specific success in targeting the youth demographic. Yet, religious channels are excluded from all three applications.

5241 Commissioners, we need your help in establishing a fair, firm and Canadian foundation for subscription radio. None of these, with respect, are provided by the proposals before you, so we urge you to deny these applications. We urge you, instead, to call for applications which will make Canadian subscription radio look like Canadian cable and DTH television: predominantly Canadian, with access for a diversity of Canadian programming, in both official languages and third languages and including Canada's religious faiths.

5242 Thank you.

5243 THE CHAIRPERSON: Thank you, Mr. Marchant.

5244 Your oral presentation was very clear, as were the two written submissions. The only questions I have are in respect of your comments on page 5 of oral presentation today. We refer to your technical advisers. I take it they are not here with you today.

5245 MR. MARCHANT: No. Principally, I'm referring to Pit Bull of Bolsen Consulting, who we use regularly. He, in turn, had some conversations with others.

5246 I might add that the points that are made here, I might just support those briefly with this, that I understand XM is planning--or is providing some video product on its distribution system.

5247 I guess it's our contention that this just simply hasn't been looked at. And I would note that the conclusion drawn in the public notice of Industry Canada, that it's not likely to be available in the future, isn't supported by any particular documentation.

5248 THE CHAIRPERSON: Right. I guess the issue is that very often, when a licence is being applied for, and particularly where new technologies are involved, the Commission is told about future possibilities.

5249 Our problem is we have applications here today and so the viability and likelihood of future possibilities, to the extent that these are raised in intervention, it would be useful to be able to probe that a bit, as to when, where, how, what and cost.

5250 MR. MARCHANT: Well, I'm certain that such a feasibility study could be done. I'm sorry that it isn't something within the resources of my client to go and do.

5251 I might add this point that I think is relevant but a little different, that the Commission did make a call for applications for this general category of thing and what it initially invited were indications of interest. It received -- because I was involved in that -- some indications of interest simply for program services. Those applicants were encouraged to withdraw because the Commission simply wanted to consider ones that had their own distribution system with them.

5252 I assume that the Commission's intent was not to foreclose access to these two huge categories of programming for Canadians, but that would be the effect.

5253 I guess with respect, Mr. Chairman, I think particularly given that Industry Canada has called for public comments -- and I am certainly going to encourage my client or my clients, I might say, to respond to that and to challenge the contention that it is not likely to be available.

5254 I don't know whether my clients can carry the full burden of it, but I would urge the Commission to join in that approach because I think the stakes for the national interest and for this category are sufficiently important to warrant that prudent delay.

5255 THE CHAIRPERSON: I guess we will look to that proceeding. As I indicated in the opening remarks at this hearing, the issue of a change or not in Canadian satellite policy is very pertinent here.

5256 On access of course -- I don't know whether you were present at the questioning of the applicants, but the issue of access has been raised with all of them and in two cases they are applying as distribution undertakings, in the third case the applicant indicated that it would be prepared to be considered a distribution undertaking even though it is applying as a programming undertaking, and the issue of access was raised with it as well.

5257 MR. MARCHANT: I have followed the hearings. At the same time, as I indicated, we specifically approached those applicants and either got no response or "Go to New York" or "Go to Washington". I think it is important that there be access, not simply that it be discussed, with respect.

5258 THE CHAIRPERSON: I understand your point.

5259 Thank you very much, Mr. Marchant.

5260 Mr. Secretary.

5261 THE SECRETARY: Thank you, Mr. Chairman.

5262 The next appearing intervention will be presented by the Canadian Independent Record Production Association, Messrs Brian Chater and Geoff Kulawick.

--- Pause

5263 THE SECRETARY: Mr. Chater, you do have 25 minutes to make your presentation.

INTERVENTION

5264 MR. CHATER: Thank you. Excuse my voice. I'm having a bit of trouble with it.

5265 Good morning, Mr. Chair, Madam Vice-Chair, Commissioners. My name is Brian Chater, President of CIRPA, and with me is Board Member Geoff Kulawick, President of Linus Entertainment, who releases records by such well-known Canadians as Gordon Lightfoot, Ron Sexsmith, Canadian Brass and Quartetto Gelato.

5266 We appreciate your invitation to appear at this hearing to express our views on these applications and their relationship to a number of vital issues for Canadian creators and entrepreneurs and for the future direction of broadcast policy in Canada.

5267 In a piece dated October 19 from Wharton Strategic Management, the opening sentence notes that SIRIUS Satellite Radio issued a statement describing the acquisition of Howard Stern for its network, without a trace of humour, as, "the most important deal in radio history".

5268 In this hearing CIRPA would like to echo that sentiment, without a trace of humour, that this hearing is the most important hearing on the future of Canadian broadcasting for many, many years and, in the view of CIRPA, has major ramifications for the entire future of Canadian broadcasting.

5269 As everybody in this room is acutely aware, technology is rapidly changing the whole industry and, to mix metaphors, tilting the playing field, while at the same time moving the goalposts.

5270 All of this is to make clear that CIRPA, as stated in its intervention, regards these applications and this hearing as a major policy issue. For the record, we reiterate our view that there are so many key issues that need to be addressed, discussed and resolved, particularly in light of the aforesaid technological changes that are taking in place that, in many instances, are blurring the lines of demarkation between various media, that a separate and detailed policy hearing is called for in consideration of any licence application.

5271 From a policy perspective, while this is a subject we could debate for hours, as we have time constraints we would just like to draw to the Commission's attention to three recent pronouncements in this regard and then offer brief summations of several policy issues that are of major concern to CIRPA.

5272 One, in a recent Supreme Court decision on the SOCAN Internet tariff, at paragraph 63, the Court stated:

"Canada clearly has a significant interest in the flow of information in and out of the country."

5273 Two, A Cultural Diversity Coalition update in September 2004 quotes what Canada said at the UNESCO debate:

"The proposed UNESCO convention on cultural diversity should explicitly incorporate as one of its objectives the right of government to take measures they judge appropriate to protect and promote cultural diversity."

5274 Three, The Minister of Canadian Heritage, the Honourable Liza Frulla, stated on September 9, 2004, when responding to the publication of new data on international trade in cultural services:

"This is the reason why it is so important to have a convention on cultural diversity. This convention could establish clear rules that enable Canada and other countries to maintain policies aimed at promoting culture."

5275 CIRPA submits that all of these are key policy points that merit considerable detailed discussion. There axe many others that immediately come to mind. Among these, of course, is the substantial issue of technological change and how it is affecting whole industries and the Broadcasting Act, a point that has been brought up by some applicants.

5276 As a representative of the music industry, I can certainly attest to this, but equally important is what these changes are doing to relationships between different creators and owners and different industries. We could continue on this subject alone for a long time as it is, in our view, of critical importance to the hearing, but given the major time considerations we are under we will just flag this issue to the Commission as yet one more reason for a policy bearing in this regard.

5277 It is clear that an important part of the overall policy discussions that CIRPA feels should take place first is the issue of government policy and support programs for the music industry and clarification of how these will fit into the overall picture, both now and in the future. It appears to CIRPA that from reading some of the applications there are either misconceptions or misinformation in some minds as to the changes that have occurred and continue to occur in the music business, and their impact on the independent sector. This is yet one more issue that CIRPA feels requires a detailed policy evaluation before proceeding to a licensing process with the long term implications that these applications have raised.

5278 Another key "policy" issue that CIRPA submits should be considered in this whole discussion is that of the use of music at a marketing tool by providers of services, in this case satellite radio. Given the advances in technology that are constantly taking place, this issue requires a very real and urgent policy discussion. This discussion should not just be about the uses of another product to make money by a third party and what the appropriate monetary recompense for this might be, but should also address the availability of digital quality radio signals that can and will be downloaded by new devices that are coming to market even at we speak, and the effects this technology will have on the independent music business and its ability to remain in business.

5279 Unlike previous hearings, these issues are today a reality and not just some hypothesis of future scenarios. In the view of CIRPA, these facts alone should play a major role in the policy hearing.

5280 Yet another major policy issue that CIRPA feels is of critical importance, and will return to later, is that of exactly what is proposed for licensing. Reviewing the applications, it would appear to CIRPA that some applicants an asking to be licensed in entirely new categories. To repeat, CIRPA submits that this is a major policy issue if such changes are to be allowed and, once more, points to the need for a full policy hearing in this regard prior to any discussion of the applications themselves.

5281 To conclude this section, CIRPA submits that all the issues we have raised above clearly point to the need for a policy hearing, particularly given the fact that some applicants are asking for a foreign program service to be licensed in Canada, something that CIRPA is of the opinion would radically change the nature and substance of Canadian broadcasting in the future.

5282 To turn to the issues raised in our written intervention regarding Canadian content, the position of CIRPA is simple and fits with our comments and observations in other sections of this presentation.

5283 In our view, any service licensed by the Commission should fully adhere to the current regulations on Canadian content for all channels broadcast. CIRPA is of the view that these services should be licensed fully and we would be concerned with any agglomeration of channels partly from Canadian and partly from foreign sources. The Commission will recall our strong views on this and our active participation in the hearings and subsequent proceedings at the pay audio hearings in 1994, even though what was being proposed at that time was clearly a niche use.

5284 The quotes and expectations of the applicants we are reading in the press are very different this time around it would seem. We note in the piece from the Wharton Business Review, Wall Street analysts have that voted satellite Radio is the future. The same sentiment is voiced by Wharton School professors, amongst others.

5285 Now, whatever you may think of Wall Street analysts after Elliot Spitzer, the fact remains that, given all the expectations being quoted, if this is indeed the future then this is clearly a horse of a different colour and the issue of Canadian content becomes of critical importance to this whole discussion if the Commission policy in this regard is to continue to operate in its current way.

5286 Some applicants are making the case that the almost total lack of Canadian content in their service will somehow be offset by the benefit of a few Canadian program channels being beamed across the United States and the "broad" exposure this will bring to Canadian artists in a major export market. They also cite the additional copyright fees that will be earned by Canadians as a benefit.

5287 CIRPA would like to address these two points and the "real world" of the music and media businesses. First, the supposed U.S. benefit.

5288 The reality of U.S. media is that the vast majority of Americans listen to and watch American programming. CIRPA views this as a choice of Americans in general and, as much, it is entirely their choice and it is not for Canadians to comment or make suggestions.

5289 A recent example of this predilection on the TV side is the hit British TV show "The Office", which had cult success on BBC America and won two Golden Globes. However, in order to "mass market" this series NBC has recast it using an American cast and added American writers to the team to "Americanize" it. Again we repeat, there is nothing whatsoever wrong with this approach, we are merely using this as an example of the realities of programming Canadian channels in the U.S. and expecting a big take up.

5290 Also, we would like to address the point that some applicants are using the wording "broad exposure" across Canada and the U.S. as a sales benefit. While one might characterize it as "broad exposure" in that it is everywhere, the reality is that there is not broad exposure by listeners, as it is, by the applicant's own admission, a niche subscription service with a limited market, even with their projected subscriber take up by 2010.

5291 CIRPA notes also that while Canadian content on American-programmed channels is presented as a fait accompli and a major benefit, nowhere is any promise made on any channel of any actual percentage. Even given this minimal and totally non-guaranteed exposure, one might also want to discuss the number of "spins" and where in the broadcast schedule these occurred, rather than just raw airplay lists of who and what was played.

5292 While time constraints don't allow a detailed discussion of the realities of marketing, distribution and selling of recorded music in Canada, the U.S., or indeed any other market, the current realities of this whole issue are very relevant to this whole process and, in our view, require a very detailed research and discussion and clearly points, once again, to a policy review of the whole issue prior to a hearing.

5293 Finally, some applicants have raised the issue of copyright payments and how increased monies will benefit Canadians.

5294 Notwithstanding the fact that some applicants have stated in a different context that copyright is an irrelevant issue at this hearing -- a policy point with which CIRPA strongly disagrees by the way -- the issue here is flow of monies to Canadian creators and CIRPA has two comments.

5295 First, the quantum of any payment by these services is still to be determined and, given the history of user/creator disputes over rights payments in the past, predicting what might or might not be paid is, at best, a guessing game, especially given the low initial projections re revenues.

5296 Second, and of far greater relevance, by their own admission some applicants will be programming a very high level of foreign content on their services so in fact whatever quantum is established, the vast majority of the money will not flow to Canadians anyway.

5297 The next issue that CIRPA would like to address is the licensing process, and whether some applications are licensed at all.

5298 First, notwithstanding the protestations of some applicants that the ownership and control is in Canada and they had the power to remove or adjust channels being imported, the fact clearly remains that in these applications the vast majority of program channels are programmed in a foreign country.

5299 In the view of CIRPA, this is clearly contrary to all tenets of the Broadcasting Act and Commission policy regarding licensed broadcast services in Canada.

5300 Some of the applicants have made the argument there is a strong and widespread support for the service from consumers and from users such as car manufacturers. Even if this is true, the fact remains this argument is basically spurious and there is no justification for contraventions of the Broadcasting Act.

5301 CIRPA is sure there is support for carriage of many U.S. channels, as witnessed by great market sales. That doesn't mean the Broadcasting Act allows it.

5302 It appears to CIRPA some applicants argue the nature of the service, the importation of an entire block of special programming, constitutes a channel. The argument is then made that use of Canadian resources is rendered impractical by the nature of the service.

5303 It would seem to CIRPA a trifle disingenuous to create an exceptional service and then try to broaden the exemption under the Act to cover it. CIRPA very much doubts that it was the intent of the legislator that this would be the case when drafting section 3(1)(f) to the Broadcasting Act. To say the least, it is the very broad interpretation of the word "format".

5304 As we say in the music business, let's get real here. Now viewer content means components of a program and format, at least in the case of music formats, means a genre of music, for example, Canadian content and smooth jazz format.

5305 In the view of CIRPA, some applications conveniently portray this argument in all or nothing terms to try to make this contention more valid. It would seem to CIRPA that some applicants are basically relying on the creation of a totally new entity that doesn't currently exist to justify being licensed.

5306 Clearly, as CIRPA has stated earlier, the issue is a major one of policy that should be part of a wide ranging and very detailed discussion of the future of radio that needs to be fully canvassed and studied before any decision on these applications is made.

5307 CIRPA notes that some applicants have made reference to the 1995 decision on digital pay radio as an example of a similar licensing process to the current one. So that the record is absolutely clear, CIRPA wishes to reiterate the fact it did not agree with the reasoning of the decision then and it does not now.

5308 We would also point out, given the major differences between pay audio and the expectations expressed for satellite radio and scenarios, this is clearly a major issue of policy that has to be discussed.

5309 Some applicants have also tried to make a comparison to video on demand to make their case for the licensing of special treatment. CIRPA feels this argument lacks validity for it is patently obvious this is neither video nor on demand. If you subscribe you get all channels all the time, not just when you ask for it.

5310 CIRPA also disagrees with some applicants when they make the case at section 3(1)(f) "should be interpreted in the context of regulatory policy and should be viewed in the context of section 5(2)(c)". CIRPA is of the view this argument totally neglects to take into account section 5(3), which clearly seems to trump section 5(2)(c) in favour of section 3(1)(f) if there is a conflict in objectives in these two sections.

5311 Applicants have also argued that the Commission's thinking in the 1999 new media decision lends credence to their arguments in this hearing. However, in the view of CIRPA, and from its recollections as a participant in the hearings, the feeling appeared to be at that time that this was a fluid and evolving area and while for the present time the Commission would not licence or otherwise regulate these new media applications, it stated it would return to the subject in five years to further review this issue.

5312 To be clear, whatever decisions were made and will be made in the future on new media, CIRPA is of the view that these proposed services are clearly not new media in the sense that it was discussed at the hearing in 1999.

5313 These services and applications are merely a new technology doing similar things as before, providing music to consumers through what is effectively a broadcasting entity by another name. It is merely added technology, if you will, not new media.

5314 An example might be FM as opposed to AM, or DVD as opposed to video cassettes, the product is essentially the same, unlike many new media services and products.

5315 To return to our written intervention according to a policy hearing, CIRPA would like to address the issue of whether there was actually any need towards a rush to judgment on these issues. In our view, while moneys are being freely expended in all directions by some applicants both on talent and structure, there appears to be little money being earned before the if all reports in the press are correct.

5316 A Globe and Mail article in October states that the applicant SIRIUS lost $151 million U.S., in the second quarter on revenue is $13.3 million. And the Wharton Strategic Management piece states that for the same quarter, XM lost $166 million on revenues of $52.9 million U.S.

5317 As of September 30, Wharton states that XM had 2.5 million U.S. subscribers and SIRIUS 700,000 for a total of 3.2 million with projections for both services combined to come in at 4.1 million subscribers by December 31.

5318 CIRPA notes an article in the Toronto Star following the XM announcement of its planned move to Canada earlier this year stating that U.S. analysts were wary of the deal. CIRPA also understands that the U.S. company, in partnership with one of the applicants, has received substantial operating funds from GM to enable its continued operations.

5319 Given the current cash outlay of some applicants, and the fact as reported in Business Week of November 1, GM missed earning expectations in the third quarter and lost money on its North American operations as well as having sustained a $3 billion loss in Europe since 2000. CIRPA wonders what the position of GM might be in the future of any additional funding for such initiatives as this.

5320 To quote the chairman and chief executive officer of GM:

"We have to be more aggressive to address some chronic problems"

5321 In referring to its current financial situation.

5322 An area we would also like to comment on is the data being distributed by some applicants regarding the adoption curve of satellite radio as compared to the launch of radio, TV and CD players. In the view of CIRPA, comparisons between these take-ups are spurious and it is basically comparing apples and oranges.

5323 While it is true all these new products will be acquired first by early adapters, the big difference is the relatively low cost to consumers of subscribing to satellite radio and paying for the equipment as compared to the purchase of early market additions of radios, televisions and CD players which were inherently high-end products until mass production drove their prices down.

5324 Although CIRPA has not reviewed these numbers and the research behind them in detail, if absolute sales numbers are involved then an increase in absolute population over time given when these initiatives first came to market also has to be factored into the equation as well.

5325 To quote Professor Fader from the Wharton Strategic Management piece, "The growth curve may look like a hockey stick but satellite radio still has to get beyond the early adapters."

5326 CIRPA is of the view, given all this uncertainty, should you have concerns about any or all of these applications, that there is little need to rush to make a decision until it becomes much clearer or actually happens in the marketplace in the next year or two.

5327 This approach would be similar to the new media decision by the Commission in 1999, where essentially it took no action pending the development of the marketplace and establishing its successful new business models. We would offer this to the Commission as a possible interim solution, maintaining our positions on that which is stated in our intervention.

5328 The next issue that CIRPA would like to comment upon is the involvement of the Canadian Radio Broadcasting Corporation.

5329 Given our detailed comments in our written intervention, we will restrict ourselves now to a few additional comments on this key issue.

5330 CIRPA notes that, one, in a CBC Radio fact sheet handed out is corporate priorities for 2004 stating in item four: to demonstrate that CBC Radio is a well managed company and generates cash flows to reinvest in programming.

5331 Two, CBC Radio Canada in its SIRIUS presentation package states that its financial contribution will be $13.4 million in cash over the first two or three years after licensing.

5332 In CIRPA's view when comparing these two statements, this raises four questions:

5333 One, are there other commitments in kind or in services apart from the $13.4 million in cash?

5334 Two, given the public knowledge of the current numbers at SIRIUS and the current potential financial situation, why does CBC Radio Canada think this is a good investment to put funds controlled by a public corporation into this proposal?

5335 Three, it will be providing a foreign program service with minimal and mostly unguaranteed Canadian content to Canadians in exchange for four Canadian CBC channels on pay satellite with a very limited number of potential listeners as compared to terrestrial radio. How does CBC Radio Canada justify its application given its mandate under the Broadcasting Act?

5336 Four, if it has spare money from its commercial activities, why is it not using that money to create programming when it states in its own document this is a major objective of a public corporation rather than making speculative investments?

5337 CIRPA has other problems with the CBC involvement.

5338 As the Commission knows, we expressed major concerns in our written intervention regarding the differences in rationale contained in the 1994 application by Galaxy in the clear support and acknowledge of Canadian identity and Canadian creators that was contained in its document.

5339 The current application, which essentially has minimum Canadian content and programming control, in our view clearly in no way fulfils the mandate of the CBC.

5340 CIRPA also notes with dismay that nowhere does CBC Radio Canada address these issues and also the availability of Galaxy channels for the service. This is a matter of major concern to CIRPA.

5341 CIRPA also has concerns with the reported business practices of CBC Radio Canada. It has been reported to CIRPA that CBC Radio 3 promoted its application heavily to the Vancouver Indian community to sign on to the application.

5342 It may have happened before but CIRPA can't recollect a media campaign using a licensee's broadcast facilities to lobby business for a new licence when it well knows there were competitive applications in the marketplace that did not have access to this option to promote their application.

5343 CIRPA was also not privy to what potential supporters were told in this regard, but it certainly raises many questions.

5344 Was there any indication, for example, that outside their own channels, the vast majority of music will be foreign programs and as of today is basically non-Canadian and there will be no guarantee of any Canadian content there whatsoever?

5345 Further, was it maintained that the application -- mentioned that the application was for a subscription service that projected at best in seven years it would still only reach a small percentage when compared with the total number of radio listeners?

5346 There are many words to describe this behaviour in our view and somewhat questionable is about as polite as we can get.

5347 To conclude our comments on CBC Radio, we note that it trumpets the value of launching two new radio services focusing on new music and emerging artists.

5348 The fact is in our view that an investment of $13 million plus some frequency juggling and negotiating across the country, CIRPA feels it could go a long way toward doing this using terrestrial radio and not have to use satellite radio, which as CBC Radio Canada knows is a very different animal.

5349 We trust CBC Radio Canada will make this point absolutely clear to those who were asked to intervene on its behalf.

5350 CIRPA has diligently searched the Broadcasting Act and nowhere can it find wording that says it is a CBC Radio Canada mandate to be a distributor of foreign program services or that it should be programming into the United States unless we have missed something in our reading.

5351 CIRPA is also of the view the corporation is acting in clear violation of its mandate through its involvement and its application.

5352 We are now in our final point, that of Canadian Talent Development matters. As the Commission will note, CIRPA has raised in our written interventions three issues. These are self-evident. We do not intend to comment further except to say we totally stand by our position as stated in these issues.

5353 There are however some points we would like to add in this regard.

5354 First, in the view of CIRPA, commitment to Canadian talent developed by broadcasters, whether high or low, are a secondary function to that of Canadian content on air in the Canadian regulatory system and as such cannot in any way be substituted for actual air play. It is merely an additional benefit the Commission requires from broadcasters under the current system of regulation due to the fact only a limited number of broadcasting licences are available to be granted to applicants by the Commission.

5355 CIRPA also notes an applicant's presentation on CTD laud their value to Canada and the broadcasting system while making no numerical commitment whatsoever to Canadian music on the vast majority of their programming. As we have stated, CTD commitments are an adjunct to Canadian content airplay and not a replacement.

5356 We conclude this presentation with a brief statement regarding sections (h) and (i) of our intervention concerning the sales replacement issue and the encryption issue. These are both issues of major substance and concern to CIRPA members. But given the time we have already taken we note both these issues are raised in detail by other interveners and we expect will cover them comprehensively I their presentations and will clearly echo our concerns on these important issues. CIRPA would only comment that these are just two more issues that are ongoing and of major import and which clearly point to the need for a wide-ranging and detailed policy hearing on this whole issue.

5357 CIRPA thanks the Commission for its time and for its indulgence and looks forward to answering your questions you may wish to ask.

5358 And I apologize for my really bad voice.

5359 THE CHAIRPERSON: Not at all. Thank you, Mr. Chater. Commissioner Pennefather.

5360 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman. Good morning, gentlemen.

5361 MR. CHATER: Good morning.

5362 COMMISSIONER PENNEFATHER: Good morning, Mr. Chater. Thank you for your very thorough intervention, both written and oral, this morning. You have covered a great deal of points in depth. So I think our questions will just try to draw out some of the points a little more.

5363 I guess what I would like to ask you a little more about is one of the themes that you raise is satellite radio is the future. Yet you would suggest we take time, if you will, to review. There seems to be a mix of both urgency in your comments and yet how to approach the future called satellite radio. Here we are in a situation, yes, this is both a policy hearing and we are looking at specific applications where we address these issues.

5364 So in the sense, you see satellite radio as the future. In what way do you mean satellite radio is the future? Will it replace other technologies in radio, is it...? That would reflect, to me, a certain degree of urgency. Could you just expand on that point?

5365 MR. CHATER: Happy to. We think that satellite radio in fact may be the future, we didn't say it is the future. However, if it is, we have to adjust to it now rather than later or we have to do something now or make decisions now based on what may or may not be. The other question you are asking about is relationship to the entire spectrum of everything, if you like. My answer, a bit quickly, that nothing has ever replaced everything. As we have all heard for many many years television is going to be gone when... I am sorry, movies were going, television came, books were gone when this came. I still read books everyday, I still watch television everyday, I still go to the movies everyday.

5366 So, in fact, what you are seeing is an increase of various media activities. Obviously, that being said, is that there comes a point when it becomes... you have to make a choice between media. But I don't think, in the short-term, my last time... I don't know when that will be, it will not go away and it won't change. That being said, I mean, to answer your other question we don't see any evidence as yet of any major impact on current terrestrial radio, however, we are only a bit of the way down the road. We are just slightly down the road, we don't know yet, so it is very hard to tell. I mean, that is why we are saying it may be an option we are throwing out to you, to wait for year two and see what happens.

5367 MR. KULAWICK: I would like to say something.

5368 MR. CHATER: Go ahead.

5369 MR. KULAWICK: I don't know if it is satellite radios, the future, but I think digital multi-channel radio is the future and there is certainly a need to get more channels of exposure for artists. But I think it is important to know that it is not necessarily foreign channels that would benefit. I think Canadian program channels that include the Canadian content under the Broadcasting Act are essentially primary for us to continue to be hearing voices by Canadian artists. We do get airplay or we do get broadcasts in America through SIRIUS and XM, but they are such a small percentage compared with the volume of music that is played, that we do get exposure but it is a very small percentage of what the music is and the artist that they are actually playing.

5370 COMMISSIONER PENNEFATHER: You are right on where my next question was, so let me just stay with you a moment on that point. You say there is a percentage now of play, I am assuming you are saying in satellite radio in the North American footprint. Can you give me a sense of what kind of percentage that would be?

5371 MR. KULAWICK: I don't know of any data that identifies what percentage of artists are Canadian, it would be very difficult to pull that out because I just don't think there is research available or a tracking method or reports that would give you total play as a percentage and count it up. However, I can tell you that there was... one of the applicants brought up an airplay gap using one of my artists as an example and I just found that it was completely a distortion of the fact that, yes, we did get more plays on satellite radio in America than we received on terrestrial radio in Canada, but it is just a de facto of the fact that there are so many channels of music that the 30 or 20 plays that we received were surrounded by tens of thousands of plays of other artists that weren't Canadian.

5372 COMMISSIONER PENNEFATHER: That is my point. If I may, Mr. Chater, as well... just to pull the conversation, practically speaking, that the reality-- If we look at satellite radio as one of the futures then, in fairness, and certainly it is here

5373 MR. CHATER: Maybe, maybe.

5374 COMMISSIONER PENNEFATHER: It is a concept of several channels. To your point then, wouldn't it be an advantage to Canadian artists to have an even greater place in that particular kind of radio? Let us take it beyond it will not replace other radio, it is what it is, and isn't there some benefit to artists to have this kind of exposure?

5375 MR. CHATER: Yes.

5376 MR. KULAWICK: Absolutely, and we need more access to listeners for Canadian artists and a system that allows people to listen to the types of music they want, the variety or the styles. It would allow a lot of our artists to be heard where they cannot be heard currently under the limited number of terrestrial frequencies. So, I think it is essential that we make channels available and musical styles available to Canadian listeners.

5377 But I think the real danger is that if we import these signals then we are going to be looking at a situation where potentially in a year down the road the landscape may change where perhaps Canadian artists wouldn't look so well favourably by the programmers in the Unites States. I use an example of how France is portrayed as a nasty country. Well, we would have no ability to have Canadians heard in Canada to any great degree if the programming choices made outside of the country were such that they chose not to support Canadian artists for example. So I think it is important that we can have a relationship with the broadcasters where I don't need to send records to New York to get airplay to reach a listener in Medicine Hat.

5378 MR. CHATER: I would like to add a couple more points. To come back to your first question, and this is me speaking, not CIRPA. Having don't the research, and I am sure the applicants will love me dearly for this, I can say I don't really feel that I have a business mould that is potentially successful, I really don't. This, to me, is a dotcom in disguise, both XM and SIRIUS. I am using my hand over fist, that is what you see, that I quoted $100 million each in the last quarter. You can't go on doing this forever, you have to break even at some point and, I know, we didn't break even yet and they have tremendous capital costs.

5379 Is this a business? We don't know yet. And I think... I mean if you go back to the 1999 decision, I think we didn't agree with it at the time and (inaudible) we do, that you were correct in saying we should do nothing for the moment and wait and see what happens. And I think, you know, this is me speaking, not CIRPA, you have two business plans which are by no means clear, they will be successful. I mean, we hear a lot of talk about this and that, I mean, that's (inaudible) applications are very different, especially about the future.

5380 COMMISSIONER PENNEFATHER: I take that point. And, again, here we are though and we do have, as you say well here, a balancing act in terms of trying to see the benefits and the downsides at the same time. And particularly, considering that you are coming from the Independent Record Producers' Association, I think it is... What I was looking forward to was getting some specifics from you on the realities, both good and bad, of how you see this. And just so that I understand your earlier point, Mr. Kulawick, is it,--

5381 MR. KULAWICK: Yes.

5382 COMMISSIONER PENNEFATHER:  --and considering all your experience in production of music in this country, if in terms of subscription radio then and subscription radio as proposed by at least two of the applicants, you would see the importance of both Canadian channels and exposure on the U.S. services that are part of what the Canadian subscriber receives as very important.

5383 In your presentation, Mr. Chater, you call this a horse of a different colour and yet you say the current regulations should apply. Just how far is it a horse of a different colour and could you give us some sense of how much in light of... Let us assume some benefits here for artists and it is a reality down the road, business plans aside, if you could give us a little more detail on how you see that balance. What could perhaps be a formula? I am sure you are aware of the discussions we have been having over the last few days on just these points.

5384 MR. CHATER: I have listed to them with some interest. I mean, you know, as I say... as you may know, I have been here since the start, we do regard it as a very important occasion. Two points, one, I think it has to be absolutely clear from CIRPA's point of view that two of the applicants out of three, the programming is not taking place in Canada on these channels, end of story. And I am sorry, I don't agree that control, switching things on and off, is control. Control is about... programming is what you put on. You shouldn't have to go to somebody in New York, as Geoff said, and say will you play my song in Canada?

5385 And the second thing is that, we could discuss for hours, the mechanics of how you route merchandise and market records, how you sell them. The reality is that, as I say or in this presentation of CIRPA says, we are unconvinced that we must take up in the U.S. for Canadian channels. I mean, I can speak to this as an Englishman, ask me about Scotland. I don't know much about Scotland and Scots would tell me you should know about Scotland because it is a big country and we do a lot of things and they do, I grant you. However, that being said, unless they tell me in the park about Scotland I don't know much about it and that is the equivalent of U.S./Canada is England/Scotland. So, I can view it from the other side too.

5386 MR. KULAWICK: I would like to address that as well if I could. Already Canadian artists merit exposure on many channels in America and they get it, they are getting it, and it is based on merit and it is also based on the culture of America and what Americans wan to hear and what they choose to listen to. So, the danger of having a Canadian channel in America is that you might have a situation where instead of a Canadian artist being mixed in with other folk or electronic music, it would be oh, you know what, we are already supporting this act on the Canadian channel so we don't need to mix it in with where all listeners of that genre might be listening.

5387 If you produce electronic music you need to have your music heard where those listeners are that are listening to electronic music. And I, for one, don't see any take-up on Canadian channels that are block programmed where people tune in for a specific hour. I see that as the niche of the niche and I frankly think the danger of having Canadian artists relegated to a Canadian channel outside of this country has little or no benefit. And, you know, we hope to see our artists continue to be played on XM and SIRIUS and within the channels that they already have.

5388 MR. CHATER: If I may, Commissioner, one more point on that issue. The analogy that you use here is the British analogy. I mean, in 1964 I am sure if you put a British channel on, you would have 400 channels saying well put 400 on. Now, as my friends in Britain tell me, the equivalent IMA, which is the Independent Music Association, they are looking at ways of trying to find methods to get British product onto America airways because it doesn't fit the genres, it doesn't match urban music, there is some, but there is a variety of differences. But British music, believe me, in the U.S. is very very cold.

5389 COMMISSIONER PENNEFATHER: Thank you very much. I appreciate your responses to my questions.

5390 MR. CHATER: Yes, no problem.

5391 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

5392 THE CHAIRPERSON: Mr. Chater, just one question. In your written intervention you list both satellite radio providers and the terrestrial applicant.

5393 MR. CHATER: Yes.

5394 THE CHAIRPERSON: But most of your comments, both in the written and the oral intervention are directed at the satellite providers.

5395 MR. CHATER: Correct.

5396 THE CHAIRPERSON: What is your view on the terrestrial application?

5397 MR. CHATER: It has pluses and minuses. I mean, as you know, we don't support or oppose any particular application ever. But, I mean, there are, as Commissioner Langford said yesterday, there is some issues there that, you know, which have been raised. I mean, obviously, by definition, you hear it all the time from us, we like Canadian content. I mean, that's by definition.

5398 How it plays out -- I mean, really, I would be presumptuous to suggest to you how you might want to licence it, but I have no particular views on it, apart from Cancon.

5399 THE CHAIRPERSON: But if I check off the criteria that you thought are deficient in the satellite applicatons, most of those seem to be met by the terrestrial applicant, airplay and so on.

5400 MR. CHATER: As we say in all our presentatons: Here are various criteria, we don't want to suggest to you what you do or don't do, we're just saying, "we like these." And, obviously, by definition, we like Canadian content.

5401 THE CHAIRPERSON: Thank you.

5402 One is left to wonder what further information you could provide to us that you haven't already provided.

5403 MR. CHATER: Believe me, I could be here for hours, but you wouldn't like that.

5404 THE CHAIRPERSON: Thank you very much.

5405 Mr. Secretary.

5406 THE SECRETARY: Thank you, Mr. Chairman. The next appearing intervention will be presented by CKUA Radio Network, Mr. Ken Regan and Mrs. Sharon McMullan-Baron. You have ten minutes to make your presentation.

INTERVENTION

5407 MS McMULLAN-BARON: Mr. Chairman, thank you for this opportunity. Good morning. I'm the Chairman of the Board of CKUA Radio Foundation, the body which governs this unique not for profit Canadian radio broadcaster.

5408 Before I begin, I would like to introduce my colleagues here with me. On my right is Ken Regan, CKUA General Manager, who will be making our formal presentation today.

5409 On my left is Patricia Bradie from the firm of Osler Hoskin and Harcourt who has been assisting CKUA as our counsel.

5410 Mr. Chairman, madam Vice-Chairman, Commissioners, almost 77 years ago CKUA Radio was founded on the principle of serving the community through the medium of radio. It was founded with the vision of utilizing the relatively new and affordable medium of radio to provide education and perhaps even inspiration by offering new ideas and experiences and by broadening horizons of people who might otherwise not have such an opportunity.

5411 And while much has changed over the years, one thing has not and it is CKUA's commitment to that founding principle. It is one of the reasons why when CKUA was briefly shut down in 1997 the community that CKUA has served so well literally rose up to save their radio service. Nothing could say more about the value of CKUA to its audience.

5412 I would like to now introduce our general manager, Ken Regan.

5413 MR. REGAN: Thank you. I hope you enjoyed that entrance.

5414 Mr. Chairman and ladies and gentlemen, thank you for the opportunity to participate in these very important deliberations.

5415 As CKUA's Chairman has just stated, CKUA radio is as much about community today as it was in 1927 but just because CKUA, like most community-based broadcasters is committed to serving local and regional communities, it does not mean that CKUA is parochial, narrowly focused or a limited service.

5416 In fact, CKUA'S programming, entertaining professional programming combined with the uniquely Canadian voice, a respectful intelligent presentation to its audience, and a presence on the Internet as garnered CKUA exponential growth in both regional and international audiences.

5417 Since 1996, CKUA's terrestrially served audience has more than doubled and CKUA's award winning web site, ckua.com now receives on average 98,000 individual visits per month.

5418 This translates to more than 1.2 million sessions a year with a number of hits to the web site numbering about 40 million a year.

5419 But the important thing is that rather than sacrifice its community character in search of this wider national and international audience CKUA has attracted global appeal by remaining faithful to its community routes.

5420 CKUA as a community-based broadcaster is as appealing and competitive in terms of its product as any broadcaster in this or any other country and it is limited only by the fact that unlike our friends makings application, CKUA being largely listener supported cannot afford satellite technology or the wherewithal to build a national terrestrial network.

5421 Mr. Chairman, as you and other commissioners are aware CKUA in September filed a comprehensive intervention concerning the three applications for licence to provide a national multi-channelled subscription radio service.

5422 That intervention dealt with a number of policy and licensing issues and, as stated there, CKUA would, in fact, support any of the applications the Commission deems most appropriate, should that transpire, as long as two critical issues are addressed through condition of licence.

5423 These are Canadian content and the funding framework for community radio. Here are the issues as we see them.

5424 But first, it's important, I think, to understand the context in which these applications come to us.

5425 Because while the applicants suggest that subscription radio is a recent or a new idea in Canada, the fact is that subscription radio, however you define it, has in effect existed within the community and campus broadcast sector for years.

5426 Therefore, it is inherent that any additional subscription service to be licensed, particularly one that's back stopped by billions of dollars worth of technology and financing will undoubtedly have an impact on existing services, specifically in this case, community and campus broadcasters who rely on listener donations and subscriptions.

5427 A second critical issue is the lack of Canadian content offered by the two applicants for satellite-based service.

5428 Like other interveners who have expressed concerns about this issue, CKUA understands the arguments relating to the foreign partners allocation of the majority of space on their U.S. services, but in the interest of Canada's cultural sovereignty, those rationalizations do not justify the limitations or make the proposals right.

5429 To rectify the problem CKUA suggests a condition of licence be applied, such that applicants wishing to introduce satellite-based services commit to significantly increasing the number of proposed Canadian programming services available at launch, with an objective of having a minimum 10 per cent, minimum 10 per cent, of the channels offered to Canadians being Canadian programming services by the commencement of third year of operations.

5430 Further, that a minimum number or percentage of the channels, as established by the Commission on approved services, be reserved for broadcasters who consistently exceed Canadian content requirements and whose content is acknowledged to meet high professional standards and whose programming and overall schedule will be attractive to both domestic and international audiences.

5431 Further, this condition of licence should stipulate that the programming and channel mix comprising that minimum 10 percent Canadian content or complement be a reflection of the full spectrum of Canada's radio broadcasting industry as spelled out in Section 3.1(b) of the Broadcasting Act.

5432 CKUA believes such conditions would augment the applicant's service offerings, would help to at least mitigate potential damage to existing subscriber services in the campus and community radio sector and would also result in a service much more reflective of the whole of the Canadian broadcasting system.

5433 The second major issue with respect to these applications is this.

5434 To survive, let alone thrive in the face of these potential new services. the community and campus radio sector in this country must have... must have a new framework of funding support.

5435 Section 3.1(b) of the Broadcast Act acknowledges the value of community broadcasting and, by extension, community radio, as a fundamental component of this country's broadcast system. It says:

"The Canadian Broadcasting system operating primarily in the English and French languages and comprising public, private and community elements."

5436 Yet, as indicated in CKUA'S intervention, the same community element exemplified by the community and campus radio sector is threatened by these proposed new services.

5437 Community and campus radio broadcasters in this country survive primarily by their wits, the generosity of their audiences and their skill at developing community focused niche programming traditionally not offered by existing commercial or public broadcasters.

5438 It is their skill of developing this unique on-air product that engenders interest, loyalty and hopefully financial support. But it remains as it always has been for this sector a very capricious existence.

5439 CKUA is particularly concerned that the incursion of potentially 200 channels of largely commercial free digital quality and universally available subscription radio that often duplicates to a significant degree the niche programming offered by existing campus and community broadcasters will no doubt erode audiences from these vital community conduits to the public airwaves.

5440 And as indicated in past CKUA submissions to this Commission, any erosion of audience for community broadcasters usually translates directly to erosion of revenues because community broadcasters receive no ongoing or direct government funding. Community broadcasters do not have authority to access investor money to develop or sustain operations the way private for profit broadcasters do and, unlike with the Canadian film and television industry, there is no significant funding framework to support, develop or sustain the community radio sector.

5441 Admittedly, there are programs that offer project funding to community and campus broadcasters, but the fact is project funding does nothing to contribute to the fundamental and systemic problem that faces all community-based broadcasters in this country and that is operational sustainability.

5442 CKUA believes a new model of funding support is required, based on operational support to at least mitigate the potential threat from the proposed services and to provide a measure of sustainability to a sector that has suffered disproportionately, simply because it often chooses to reflect communities outside the main stream or because it has not, to this date, been considered worthy of government subsidy.

5443 And yet, the community broadcasting sector is as relevant and some might argue more relevant to their communities than either private commercial radio or the CBC.

5444 Otherwise, how else can you explain its survival, considering how little support it receives from outside of those specific communities. So, what do we do?

5445 To rectify the historic and systemic inequity relating to support for the community broadcasting sector and, by extension, its communities, CKUA proposes the following solution, and in your package of materials, there is a graphic that illustrates how this might work as well.

5446 That a condition of licence be applied to any successful applicant for a national subscription radio service to the effect that all licensees contribute a minimum five per cent of gross operating revenues to Canadian talent development or initiatives identified by the Commission.

5447 And it has been encouraging to hear during these deliberations some consideration of even increasing that level of Canadian talent development.

5448 Also, that 50 per cent of these funds be allocated to support a newly created Canadian community radio broadcast fund.

5449 Also as part of the condition, that an escalating scale of support be developed for these initiatives and the fund and administered over the period of the licence term.

5450 Thirdly, that the fund be structured to support the operations and sustainability of community broadcasting in Canada, as defined as not-for-profit or by not-for-profit status, and that support not be tied to project funding.

5451 The moneys from the fund should be distributed on a matching basis, equal to each community broadcaster's revenues, as derived from their audiences.

5452 Should moneys available in this fund initially be insufficient to meet condition four, that funding support be distributed on a pro-rate basis, equivalent to each community broadcaster's revenues derived, again, from audience or from donors, until such time as the fund is sufficient enough to fulfil the matching criteria of condition four.

5453 Point six, that the fund be fully funded by the end of the licence term.

5454 And finally, that this fund, or envelope of funding, be administered by a neutral third party, such as one of the existing industry support fund administrators, such as the small market television fund, for example, or through an arm's-length relationship, to be structured under the auspices of the National Campus and Community Radio Association or other such body deemed appropriate by the Commission.

5455 Canada's radio community and its community radio are at a cross-roads. Canadian cultural sovereignty, sectoral equity and sustainability and the fundamental precepts of the Broadcasting Act will all be affected by the Commission's deliberations and determinations.

5456 CKUA is submitting its comments and proposals not out of self-interest alone, although we acknowledge our responsibility to our listeners, our donors and supporters to protect the interests of CKUA, but our intent is to offer solutions that will support and protect the interests of all campus and community broadcasters in this country.

5457 In conclusion, Mr. Chairman, when CKUA was taken off the air in 1997, what occurred was, indeed, unprecedented and, some might say, astounding. The citizenry of one of Canada's most politically conservative provinces rose up to save their community radio service. Something even more remarkable when you consider that essential services like health and education were also being cut significantly at that time.

5458 But people drew a line in the sand over CKUA radio and it begs the question: why? To be honest, I'm not sure that I have an answer. Except to surmise that over its 77-year history, CKUA has become such an integral part of people's lives in Alberta and the life of its community that, for those people who love it, losing it is not an option.

5459 And I'm not trying to hyperbolize or be melodramatic, but the love the people have for CKUA is deep and genuine.

5460 But CKUA is not exceptional in this regard. There are outstanding campus and community broadcasters throughout Canada, all serving their communities with as much diligence and passion as CKUA serves its own and they, too, are appreciated. But there is no doubt that CKUA has become a leader in the community broadcast sector.

5461 But CKUA has also had the benefit of a long history, outstanding professional leadership, significant investment over the years and the dedication of extremely knowledgeable and talented staff and volunteers who believe in its purpose.

5462 CKUA is not the example of what other community or campus broadcasters should be. Each community and campus broadcaster develops and evokes its own character and relationship with its community. But CKUA is an example of what the campus and community broadcast sector might become: strong, vibrant, professional and stable. But that will only happen and it will only continue for CKUA if community and campus broadcasters are given the credit and the regulatory and industry support they need and deserve.

5463 CKUA believes this Commission has the opportunity now to ensure that we do.

5464 Thank you very much.

5465 THE CHAIRPERSON: Thank you very much for your thoughtful written intervention and your oral presentation today.

5466 Commissioner Pennefather.

5467 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

5468 Indeed, welcome to one of the longest-standing broadcasters in the country. I was just asking my colleagues earlier to double-check when you began to occupy the airwaves. So it's a 77-year history of success and important contribution to Canadian broadcasting.

5469 Again, as the chairman noted, your presentations are clear. And today you added to the written intervention with details on your fund proposals, so I just have a few questions there.

5470 But before I do, just so that I'm clear, your proposal is related to subscription radio in this country and the potential launch of one or three, or perhaps more, subscription radio services in this country. I gather the rationale that would, therefore, bring you to propose a fund and specific licences, but a fund, in particular, to support community campus radio, is there some particular impact on campus community with subscription radio?

5471 I think I had a little trouble understanding that because the type of subscription, the type of radio is so different, that there is much of a challenge. Why would subscription radio challenge the loyalty of your subscribers?

5472 MR. REGAN: Well, because the applicants can offer a product that, in some respects, at least, and in some cases in many respects, comes very close to duplicating the services that CKUA provides to its audience or that other campus or community broadcasters provide.

5473 Most campus and community broadcasters play music of artists who are not perhaps popular enough to achieve airplay on commercial radio and they provide a venue for alternative kinds of music or different genres of music.

5474 Our subscriptions come voluntarily, so people can still access our services for nothing. That's the remarkable thing about the success that we have achieved. The $2.2 million that we raise annual in subscription comes for something that people can get for nothing.

5475 So when these new services come in, they are, in some respects, duplicating our product. It is in a digital format. We have not been able to afford to move into the digital realm. And it's commercial-free, in most instances.

5476 As the Commission knows, campus and community broadcasters have been allowed restricted commercial licences and the opportunity to sell airtime, so, in some ways, we have a product that is desired, we have restricted time sales, but to be faced with competition from something that duplicates our service, is commercial-free and is in digital format causes us some concern, particularly when they can offer it at a cost that's cheaper than many people are voluntarily paying now.

5477 COMMISSIONER PENNEFATHER: I hear you on the music component, but, by its very nature, community campus, it's my understanding, that the loyalty of your listeners is not just to the music but to the local reflection and to the community-diverse programming that you must carry under your mandate and this is national services that we are talking about. So there is a little bit of--perhaps on the music, but certainly your successes over the years has also been related to the community programming, per se.

5478 That's why I thought that perhaps there was a little bit of a disconnect there.

5479 MR. REGAN: Please.

5480 MS McMULLAN-BARON: One of the things that I have learned about subscription radio is that, when people pay for a subscription, they know what they are getting, right? You make a purchase and you are pretty certain of the product you are receiving.

5481 If they purchase subscription radio in the format that's before you, they are going to assume CKUA, if carried, receives a percentage of that subscription radio. What our funding model is looking at is ensuring that some of those revenues, then, end up back into the community sector.

5482 What I found was, for people who voluntarily subscribe, they understand what they are getting. But I'm just concerned about this new process coming in and confusing the consumers because, as proposed, that guarantee isn't there to the extent that we would like it to be.

5483 COMMISSIONER PENNEFATHER: Well, I would assume that you would make it very clear to your subscribers that--as I subscribe to different television services, I don't assume that if I subscribe to one, I'm supporting the other. So I'm sure you would do that.

5484 Let me just ask you about your COL proposals and your Community Broadcast Fund. In your Canadian content proposal number one, in the written intervention, you had proposed 10 per cent of bandwidth. Here you are proposing a minimum of 10 per cent of channels by the third year of operation.

5485 So first question: why the change from bandwidth to channels? And second question: 10 per cent, on what basis did you choose a 10 per cent minimum?

5486 MR. REGAN: With respect to the first question, channels to bandwidth, to be honest, I don't know that there was any specific rationale for making the change. It may have been more just an inadvertent change of phrasing in the second submission.

5487 With respect to the 10 per cent, however, whether bandwidth or channels, whichever it might turn out to be, our feeling is that the applicant's U.S. partners, if approved, are gaining access to--their projections--about 10 per cent of the Canadian market. So we feel it would be a quid pro quo, at least, to have 10 per cent of the available channels allocated to Canadian programming.

5488 COMMISSIONER PENNEFATHER: I think you were clear on that, in fact, in your written intervention as the thesis, the rationale, behind the 10.

5489 In terms of the Broadcast Act, and the discussions, clearly, that we have been having, do you have any comment on why you feel the 10 per cent is an appropriate minimum?

5490 MR. REGAN: To be honest, not particularly.

5491 COMMISSIONER PENNEFATHER: Is it too low?

5492 MR. REGAN: I mean, we would be happy if it was a higher percentage, obviously. We feel, as other intervenors have said, there's significant understatement of the value of the Canadian content being proposed by these services.

5493 And if could just, if I may, Commissioner Pennefather, refer back to your previous question about the subscription issue, music is fundamental to or has become fundamental to what CKUA does and we certainly provide a significant degree of other community-based of community-focused programming, but it's the music that has, primarily, helped make us successful. We use the music, if you like, to attract the donors and subscribers to CKUA that allow us to do those other things.

5494 If we were to change the balance to provide a preponderance of other kinds of programming to the detriment, let's say, or the reduction of the music programming, which is unique and professional and provides people access to artists like Ron Sexsmith and Bruce Good and The Sadies, and other people who have appeared here, we would not retain the same kind of support that we get now.

5495 So the music programming is fundamental to our success, and I suspect probably the same for my colleagues elsewhere in the community broadcasting sector.

5496 COMMISSIONER PENNEFATHER: If I may, then, take you to the fund proposal, and the first number there is 5 per cent. Now, as it's written, it says:

"...5 per cent of gross to initiatives identified by the Commission and 50 per cent to support newly created fund." (As read)

5497 The initiatives, you are talking CTD there?

5498 MR. REGAN: Yes.

5499 COMMISSIONER PENNEFATHER: Because you said CTD and it's not written.

5500 MR. REGAN: Well, it was our feeling that we didn't want to restrict that 5 per cent because the Commission might have other ideas or other ideas might come forward in these deliberations for how that 5 per cent might best be allocated. But certainly Canadian talent development seems to be the focus for the proposal.

5501 COMMISSIONER PENNEFATHER: I see. So Canadian talent development initiatives, not campus community, as Canadian talent--

5502 MR. REGAN: That's correct.

5503 COMMISSIONER PENNEFATHER:  --because I think a point was raised in reply that you, in fact--campus community is not an eligible third-party initiative.

5504 MR. REGAN: Right.

5505 COMMISSIONER PENNEFATHER: I see. So it's, basically, a creation of new fund and that fund, the 5 per cent--on what basis did you look at a 5 per cent minimum? What was your, let's say, regulatory basis--

5506 MR. REGAN: For CTD?

5507 COMMISSIONER PENNEFATHER: Yes, CTD or the fund itself.

5508 MR. REGAN: Right.

5509 COMMISSIONER PENNEFATHER: Just to be clear, I'm just talking now about the 5 per cent. What regulatory basis did you have in mind for the 5 per cent?

5510 MR. REGAN: Well, the 5 per cent is what has been proposed by the applicants, themselves. It's also, I guess, the precedent from other BDUs in this country, in terms of contributions to Canadian talent development, so we thought it was a good place to start.

5511 The 50 per cent that we recommend be derived from that for the campus and community broadcaster or the Community Radio Broadcast Fund we think would be a fair contribution to start again because we don't want to be seen to be taking money out of the pockets of the music industry or the artists in this country.

5512 Obviously, the Canadian talent development initiatives are there for a good reason and they are effective in supporting those artists. But we also believe, and it has been stated at these hearings on several occasions that, first and foremost, the most important thing for an artist in this country trying to establish themselves is airplay and airplay is what the campus and community radio sector in this country provides in spades for those artists, particularly independent artists and up-and-coming artists.

5513 And at the same time, we are not seeing any of the Canadian talent development initiatives funds unless we go through a sometimes rigorous and complicated application process. Our feeling is that if we can be given some measure of stability to continue to do the work that we do in giving airplay to those artists, then they will benefit exponentially from that, as well, and, in fact, it will simplify using the suggested formula that we proposed, it will simplify the administration at both ends and moneys that we now spend trying to survive, we will better spend in doing more work to support and promote Canadian artists.

5514 COMMISSIONER PENNEFATHER: Okay. So your justification for a fund which would support you operations is that this would be a trickle-down to artists.

5515 Under your current licence, what's your balance music/spoken word?

5516 MR. REGAN: I don't have it handy here, but I believe the spoken word is about 10 per cent, 15 per cent.

5517 COMMISSIONER PENNEFATHER: Okay.

5518 Those are my questions, Mr. Chairman, thank you very much.

5519 Thank you for your answers and for being here today.

5520 MR. REGAN: Thank you.

5521 THE CHAIRPERSON: Thank you very much.

5522 MR. REGAN: Thank you.

5523 THE CHAIRPERSON: Mr. Secretary.

5524 THE SECRETARY: Thank you, Mr. Chairman.

5525 The next appearing intervention will be presented by the Canadian Recording Industry Association, Mr. Pfolh, Brian Robertson, Graham Henderson and Stephen Zolf.

INTERVENTION

5526 MR. ROBERTSON: Good morning, Mr. Chairman, Madam Vice-Chair, members of the Commission.

5527 My name is Brian Robertson and one of my last official acts, as president of the Canadian Recording Industry Association, is the pleasure of joining you today for this important process.

5528 CRIA's job, in part, is to promote the interests of our member Canadian record labels and their artists and, indeed, the Canadian-owned legal on-line music services. In all, we represent more than 95 per cent of all records produced and distributed in Canada.

5529 Before we begin our presentation, I would like to introduce my colleagues here. On my right is the incoming president, Graham Henderson. We are also joined by Richard Pfohl; to his right, CRIA's general counsel, and to Richard's right is Stephen Zolf, a partner at Heenan Blaikie and our regulatory counsel.

5530 By way of introduction to Graham, he has a wealth of experience in the Canadian music industry. He is currently the senior vice-president of Universal Music Canada, a post he has occupied for almost five years.

5531 Graham has been involved in the music industry for over 17 years and began his legal career acting for artists, producers, independent labels and songwriters and developed what was, arguably, the largest music law practice in Canada.

5532 Additionally, a number of years ago, he upset half of the male population of Canada by marrying the etherial lead singer of Cowboy Junkies, Margo Timmins, but I digress.

5533 I would like to ask Graham to begin our official presentation.

5534 MR. HENDERSON: Thank you, Brian.

5535 I don't know how to follow that.

5536 We are here today to talk about two issues: content protection and Canadian content. At the outset, allow me to make clear where CRIA and its members fit into these proceedings.

5537 The record labels and our partners, the recording artists, are responsible for creating all of the music that will make these new subscription radio services successful.

5538 As one of the satellite applicants said on Tuesday, "It's all about the music". Our content, our music, is the guts, is the life blood, of any successful satellite or digital audio broadcasting system and we are, in effect, the primary stakeholder here.

5539 We can either be the major beneficiary of these new services or we can be their principal victim.

5540 Now, please don't misunderstand us. We recognize the potential benefits of this new technology. We are not Luddites, but we have been here before. Our recent experience with Internet piracy has taught us to view the introduction of any new technology through a more cautious lens.

5541 There are two problems inherent in the technology that underlies these new subscription services. Number one is aggregation and number two is distribution.

5542 Satellite radio is a bit like terrestrial radio, in this sense, when you turn it on, it's there, and when you turn it off, it isn't. But disaggregation occurs when some captures the signal, chops it up into individual songs, files the songs away in a permanent library on their hard drive. Redistribution occurs when that digital library is peddled on the peer-to-peer or P-to-P black market.

5543 Practically, what does this mean? Well, here's what you could do today, Mr. Chairman, members of the Commission: go home tonight and go on to eBay, purchase the XM PCR receiver, which you can get for less than $60. Once you have it, go to a web site called timetraxtech.com and for a mere $29.99 you can buy some software, which, incidentally, has been created by a hacker living across the river here in Ottawa. Then subscribe to XM.

5544 With some minor configurations to your computer, you will be in business. In a matter of days, you will have a complete library of thousands of songs, a personal digital juke box. The files will be perfect copies. The songs will be arranged for you. They will be indexed for you by artist, title, genre and so forth. You will have, virtually overnight, a record collection bigger than the HMV store on Sparks Street. Press a few more buttons and this library becomes available to the world.

5545 Latent within these technologies is the potential for them to become a PVR or P-to-P network on steroids. You would never need to buy another CD again.

5546 So what can be done? Fortunately, there is an easy fix for the problems of disaggregation and redistribution. We are asking the Commission to require each applicant, by a condition of licence, or through equivalent obligations, to ensure that their service meets certain minimum standards.

5547 First, each service must be obligated to prevent their subscribers from being able to create the type of digital juke box that we have been talking about.

5548 Second, each service must ensure that each digital receiver is self-contained, with no digital output. If the receiver has a digital output, the device must employ the appropriate digital rights management system to prevent any redistribution.

5549 We believe that imposing this obligation on the applicants should be non-controversial and within their power and the CHUM applicant's submission yesterday would appear to confirm this.

5550 The technology is available off the shelf and it's inexpensive.

5551 Without these safeguards, we could see a repeat of the last few years, years in which widespread music piracy turned a billion-and-a-half dollar industry in Canada into an $850-million industry. Years during which thousands of Canadians lost their jobs, entire retail chains closed, including Canada's arguable flagship chain, Sam the Record Man. Some artists have seen their careers grind to a premature halt and others have seen promising careers flounder.

5552 Now, you have been asked to solve a grey market problem by licensing the applicants. The music community has, for several years, faced a far worse problem, that of the black market known as peer-to-peer file sharing. If you allow the applicants to launch their services without the safeguards we have asked for, you may solve one problem but most certainly will compound another. The potential exists for a massive market failure.

5553 We have also heard a lot about artists and how they are going to benefit through the repatriation of the grey market and each applicant has also put forward an array of intended benefits, in terms of Canadian talent development. The danger here is that if these services are licensed without the adequate protections, there will be fewer Canadian artists around to enjoy the benefits and our expert reports bear this out.

5554 Richard.

5555 MR. PFOHL: Thanks, Graham.

5556 Now, the applicants, when they appear later today or tomorrow, may tell you that this issue can be addressed without Commission intervention, that our interests are perfectly aligned. If this is the case, then there's nothing that should impede them from implementing the measure that we are asking for. Unfortunately, what we see as a fundamental threat to our existence at least one or two of the applicants apparently sees as their business model.

5557 Let me give you an example. Last week, XM Satellite Radio announced the introduction of MYFI, M-Y-F-I, a receiver and recorder that, according to the press releases, allows subscribers to record up to five hours of their favourite songs. The Washington Post described the MYFI as, quote:

"The latest entry in the highly competitive battle over digital music, a fight that pits XM against its immediate competitor, SIRIUS, but, more broadly, against on-line music sources like Napster." (As read)

5558 Now, as Brian mentioned, those on-line music sources are some of our members, the difference is that we are trying to sell the product, with the MYFI, people would take it without buying it.

5559 Similarly, SIRIUS Canada referred in their presentation on Tuesday to SIRIUS' objective as creating, quote, "the iPod in the sky" with, quote, "thousands and thousands of hours of memory" and device that, and I quote again, "does all the work for free".

5560 Frankly, we remain unconvinced that this issue is susceptible to a business solution, absent action by the Commission to require each licensed service to control its network.

5561 CSR stated in their written reply that it, quote, "would not be appropriate for the CRTC to attempt to address a `world-wide problem'".

5562 SIRIUS Canada stated in their written reply that, quote:

"On a practical level, this matter will not be solved in Canada. Canada is a small market." (As read)

5563 Essentially, they are telling you to do nothing and wait for a U.S. fix, if any.

5564 This is the position of applicants who come before you seeking a Canadian broadcasting licence as Canadian-owned controlled broadcasting undertakings and, in the case of SIRIUS, with Canada's national broadcaster, the CBC, as a full-fledged partner.

5565 We urge the Commission to impose content-protection obligations on the subscription radio applicants at the time of licensing, rather than trying to stem the flow of unauthorized duplication and distribution of music after the fact. We don't want a repeat of what we saw on the Internet.

5566 Unlike the case of cable and satellite television signal theft, the replies of at least two of the applicants convey a fundamental unwillingness to adopt reasonable conditions of license. If the applicants are unwilling to address such issues at the time they are seeking licensing, imagine their position once they are fully licensed when we have no leverage. We submit that the Commission should exercise its jurisdiction in a manner that takes these considerations into account and establish the appropriate regulatory framework for these services.

5567 Graham.

5568 MR. HENDERSON: This brings us to our second and final issue, Canadian content. It is incumbent on the Commission to ensure that the Canadian Broadcasting System safeguards, enriches and strengthens the cultural, political, social and economic fabric of Canada as required by the Broadcasting Act.

5569 The Commission must determine if each applicant has made sufficient commitments in this regard. The Commission should assess each application to determine if it maximizes the use of Canadian creative and other resources, as required under the Act. While the Commission has exercised some flexibility in applying these principles in the past, CRIA recognizes that the three applications before you propose vastly divergent approaches to Canadian content. CRIA submits that the Commission must consider carefully whether these novel services serve the statutory obligations of promoting Canadian culture under the Broadcasting Act.

5570 It must also ensure that the services licensed in these proceedings do not set a precedent for establishing insufficient Canadian content commitments on the basis of technological determinism. I would be remiss, by the way, if I did not say how welcome Mr. Miller's remarks were yesterday on behalf of CHUM regarding the importance of content protection.

5571 In conclusion, we appreciate the opportunity to submit our comments and we would be pleased to answer your questions.

5572 THE CHAIRPERSON: Thank you. Your briefs were very clear and I appreciated Professor Leonard's attachment. I guess if you look at the replies of the applicants, and we will explore this further with them, essentially they make a number points, but one of the points they make is Canada should not be out in front in this. And I take your point that they are applying here for a Canadian licence and so the Canadian terms should be, in some way, self-contained.

5573 But to the extent that this is a problem being wrestled with around the world, to what extent would a condition and at what level of calibration would a condition work so that Canada didn't misstep in regard to solving an industry wide problem?

5574 MR. HENDERSON: Well, I will give you some general answers and then I will ask my friends maybe to fill in behind me. I don't think that we are asking the Commission here to solve this problem. What we are suggesting is that the solution be pushed back onto the applicants. We are suggesting that... and by the way, we would be more than willing to offer our technical assistance in this regard so that we could come up with a set of technical measures that would avoid the disaggregation and distribution problems.

5575 THE CHAIRPERSON: Without wanting to interrupt your flow, have you invited those kinds of discussions offline with the applicants?

5576 MR. HENDERSON: Yes, we have.

5577 THE CHAIRPERSON: You have, and the response has been?

5578 MR. HENDERSON: It has been I would say indeterminate at this point. As you can see from the responses of the two satellite applicants, they were extremely reluctant. They were the ones who suggested that this had to be solved elsewhere. And I should, just on that point say this, that as a Canadian I am not accustomed to thinking of our country as one which waits for Americans to fix our problems. And I believe it has been in our history and it is in our nature to solve problems. This problem does not require a global fix. It is not as if someone somewhere has to go and throw a couple of switches and then the whole problem is solved around the world.

5579 Here in Canada we can solve this problem. As I said in my submissions, the fixes are there and they can be applied to the technology relatively easily.

5580 THE CHAIRPERSON: By, in your view, making certain adjustments to the receivers?

5581 MR. HENDERSON: By making adjustments to the receivers and the underlying software.

5582 MR. PFOHL: And, might I add, basically the adjustments would allow it to recognize if we go to a digital rights management protocol where we would have a code perhaps in songs that would say listen, you can or can't copy this or you can make X number of number of copies of it, it would recognize that code and it wouldn't allow people to make those copies and to redistribute them freely on the internet.

5583 MR. ROBERTSON: And the reason, Mr. Chairman, if I could, is that the reason we are asking for a Canadian solution is that here we have had the biggest problem in the world in terms of high speed internet penetration, computer penetration. We were the first country in the world to have retail sales losses in our business. We have had the highest per capita sales losses. Retail sales have gone from $1.4 million 1999 down to $850 million last year. So we have got the biggest problem world wide, that is why we are asking for a Canadian solution.

5584 MR. HENDERSON: And if I might just add to that. It is an interesting conundrum. We have heard an extraordinary amount about how artists are going to benefit. I mean, and that is the sort of primary focus of this. What is interesting is that subscribers to this type of service may well not be the type of consumer that artists are happy with because they... based on our research, these consumers are interested in the disaggregation and distribution features that satellite radio has to offer. In other words, they may not be CD buyers. So, Sadie, the Good Brothers and other artists who are desperate to get their records onto radio and we support that and we understand it and we see the value of satellite in that, without the safeguards you may find that the subscribers to these services aren't CD buyers.

5585 THE CHAIRPERSON: Right, and I guess this is a problem whether the distribution is terrestrial or satellite?

5586 MR. HENDERSON: Yes.

5587 THE CHAIRPERSON: Now, we have had digital audio rollout in other countries, the UK we have heard from... I know that in Germany they have now switched to an entire digital transmission system and shut the analogue off. Has this problem been a problem in those countries and, if so, have there been regulatory solutions imposed and, if so, can you share with us what that experience has been?

5588 MR. HENDERSON: Well, the answer is this is a problem that the recording industry is facing around the world. In some sense, in certain less regulated jurisdictions such as the United States the players got into the marketplace before there could be hearings and before the issue could be adjudicated, if you will. That would be true for satellite radio in the United States and for digital audio broadcasting in Europe. But I can tell you that from the label perspective we view, both in Europe, where the issue is being addressed just as we are addressing it here, we view it as one of the single greatest threats to our business model yet and that is coming from an organization that has survived the internet piracy.

5589 MR: PFOHL: And, if I could just add. We are at a sort of unique position in Canada today because the technology has just recently come about that allows this sort of disaggregation, that is the copying of individual songs and then distribution. And it has become more of a threat because, as you heard over the last three days, now the next frontier is a combined sort of iPod/receiver so that people will have a built-in memory that will allow them to store thousands and thousands of songs. So, when some of these services were licensed in say the UK four years ago or what have you, that technology didn't exist.

5590 You are in a unique position because we can address this problem before the problem arises here. Our counterparts in other countries are working on this problem, but if the service is coming into Canada what we are saying is that we need to take the prudent measures to prevent the problem in Canada.

5591 THE CHAIRPERSON: I take that point. Do you see an analogue to the PVRs and television here?

5592 MR. HENDERSON: Well, the quick answer is that the TVO has about eight hours of recording time, I think, and what we are looking at here is something that is virtually--

5593 THE CHAIRPERSON: You mean TVO?

5594 MR. HENDERSON: TVO, yes.

5595 THE CHAIRPERSON: It is distinct from TVOntario.

5596 MR. HENDERSON: That is right, it is only got eight hours of broadcast. No, it is far more limited. Stephen... Oh, sorry.

5597 MR. PFOHL: Yes, if I could just add a bit to that. It is limited, in part, because they negotiated that in the States, that you could only record a certain amount of time, eight hours or so. You are not allowed to record thousands and thousands of hours of programming and you are not allowed to automatically have it record everything that ever appears on TV and then store all those programs so you can go back later and watch those programs again and again.

5598 THE CHAIRPERSON: But if you take the word "automatically" out of that, what is the practice? Are the sets... are the TVO and other personal video recorders recording proof or is it just that it doesn't automatically go onto your own hard drive or your own recorder? In other words, if you wanted to record off the TVO or off the television set and do thousands of hours, are you saying that the fact that it isn't automatic is a serious obstacle and it takes a lot of effort to do or are you saying that the device itself renders this impossible?

5599 MR. PFOHL: My understanding is that the device itself renders it impossible because there is a limit of, as Graham mentioned, I think it is about eight hours or so that you can record. So, it effectively--

5600 THE CHAIRPERSON: No, I hear that part, but can you not record off that device to your own device? You said you couldn't do that automatically, unless I misunderstood you.

5601 MR. ZOLF: I believe, Mr. Chairman, that you cannot do that, and just to give more context to that, there was another competing device, I think it was the replay player which had an additional attribute where you could share the programming that was taped onto the hard drive with 10 of your best friends, there were digital rights management measures to stop you at 10. But that went before the courts and ultimately that product was withdrawn. So I believe it is hermedically sealed, if you will.

5602 THE CHAIRPERSON: So, the eight hour rule flows from which source? Is it a court imposed rule or an FCC...?

5603 MR. ZOLF: I don't believe the eight hour is a court imposed measure, it is I think rather a technical constraint, that is the hard drive and I am sure the hard drive capacity would grow, but it is relatively limited, relatively finite compared to the problem we are talking about here.

5604 MR. HENDERSON: Just from our application--

5605 THE CHAIRPERSON: Just to follow that up if I may.

5606 MR. HENDERSON: I am sorry.

5607 THE CHAIRPERSON: So it is really... you are addressing the current state of the technology but you are not saying that there is any legal or regulatory inhibition to expanding that, hours with technology, upwards to whatever?

5608 MR. ZOLF: No that I am aware of, but that being said, there have been legal and regulatory developments which have stopped the distribution aspect of that programming.

5609 MR. HENDERSON: We can't speak--

5610 THE CHAIRPERSON: Right. Well, I guess I am wondering about this phenomenon, not just worldwide, but media deep.

5611 MR. HENDERSON: Well any owner of content we like to, you know, we have referred to ourselves... try to talk about music as much as we can because content sort of becomes a euphemism. I mean, we make music and filmmakers make films. But anyone who is a copyright owner or a content owner is going to be concerned about the potential for disaggregation and, most particularly, about redistribution. And if you just have a moment, at some point, to look at paragraph 16 of our intervention you will see what the survey turned up in the United States that, you know, 65 percent of adults surveyed indicated that they would use the cherry picking features of digital radio to record their favourite music. That is what they are interested in it for. And when they say they want to turn it into the iPod from the sky, well I have an iPod too.

5612 The difference is that my iPod... it is manual, I have to rip my files to my CD and, you know, and then back and it does have sorting features, but there is no sort of... I can't plug it into something and say okay go get stuff for me, this perfect digital copy that will substitute for the products of our members. And not just CDs, but the online services such as Puretracks, Archambauktzik and others who have just established themselves in this marketplace, a fragile toehold in a sea of unlicensed and illegal activity, would suddenly be faced with a competitor who isn't playing by the same sort of rules.

5613 MR. PFOHL: Mr. Chairman, just to return to your question regarding the T-load. We are all lawyers here so we are cautious about speaking about something we are not certain on. I was my understanding that it was either the FCC or some regulatory body--

5614 THE CHAIRPERSON: It inhibits my colleagues.

5615 MR. PFOHL: We are different lawyers. It was my understanding it was the FCC or some regulatory body in the States that had worked out that limit, but we can look into that and submit it to the Commission and let you know what the reason for that was.

5616 THE CHAIRPERSON: I take Mr. Leonard's point also that there is a tenancy in television to not want to necessarily watch a lot of repeat performances, where as--

5617 MR. PFOHL: Yes.

5618 THE CHAIRPERSON: --in music there is.

5619 MR. PFOHL: Absolutely.

5620 THE CHAIRPERSON: That is part of the differentiation.

5621 MR. HENDERSON: I am still listening to Led Zepplin.

5622 THE CHAIRPERSON: Who isn't? Those are our questions. We will explore this further with the applicants and I want to thank you very much for both your oral and written presentations.

5623 Thank you, we will break now for 15 minutes. Nous reprendrons dans 15 minutes.

--- Upon recessing at 1130 / Suspension à 1130

--- Upon resuming at 1148 / Reprise à 1148

5624 THE CHAIRPERSON: À l'ordre, s'il vous plait. Order, please.

5625 Mr. Secretary.

5626 THE SECRETARY: Thank you, Mr. Chairman. The next appearing intervention will be presented by the Society of Composers, Authors and Music Publishers of Canada, Mr. Paul Spurgeon. You have 10 minutes to make your presentation.

INTERVENTION

5627 MR. SPURGEON: Thank you. Good morning, Mr. Chairman and Committee Members. My name is Paul Spurgeon, I am general counsel for SOCAN, as you heard, Society of Composers, Authors and Music Publishers of Canada.

5628 SOCAN filed a six page submission with the Commission on September 15th, 2004. I know you and your staff are familiar with it, so I am not going to read it during the next 10 minutes. Instead, I want to focus on just one key issue which is of critical importance to SOCAN's members, namely Canadian content.

5629 Now, before I address our concerns regarding Canadian content, I want to first make sure you understand who we are and what it is we do. SOCAN is a not-for-profit Canadian organization that represents composers, lyricists, songwriters and publishers of musical works from across Canada and around the world. Although some of our members are also performers and producers, you cannot be a member of SOCAN unless you either create or publish music and/or lyrics.

5630 On behalf of our approximately 25,000 active Canadian members and hundreds of thousands of members of affiliated societies around the world we administer performing rights in music and lyrics. The performing right is that part of copyright which gives owners of musical works the sole right to perform in public or broadcast their works or to authorize others to do so in return for royalty payments. On behalf our members, SOCAN grants blanket licenses to users of music who pay us copyright royalties in accordance with tariffs set by the Copyright Board of Canada.

5631 When Canadian music is performed in Canada the royalties stay at home. When foreign music is performed in Canada the royalties leave the country, you pay for the people who own the rights. Since the livelihood of our Canadian members depends on effective Canadian content policies SOCAN has always been extremely interested in the Commission's broadcasting policies. Now that you know who we are and what we do, allow me to turn to what the Commission has called "the cornerstone of Canada's Broadcasting Act, Canadian content."

5632 Mr. Chairman, SOCAN is here today because we have three fundamental Canadian content concerns with the satellite radio applications before the Commission. First, the satellite radio applications do not meet the requirements of the Broadcasting Act, plain and simple. Second, they fly in the face of the Commission's long-established practice. And third, they would create a dangerous precedent that would adversely affect other elements in the Canadian broadcasting system. First of all, turn to the Broadcasting Act. I am sure you have heard this time in and time out, but it bears repeating. The Broadcasting Act, in a notice of public hearing you issued on July 8th, the Commission recognized that since no such services are currently licensed for operation in Canada these applications give rise to a number of policy issues that need to be addressed in order to ensure that the objectives of the Broadcasting Act are met.

5633 Now, the Canadian content provisions of the Broadcasting Act are very clear and well-known. Under the heading Broadcasting Policy for Canada, 3(1)(f) of the Act states: "Each broadcasting undertaking shall.." not may, but 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 or English, renders that use impracticable in which case the undertaking shall make the greatest practicable use of those resources."

5634 Mr. Chairman, the satellite radio applications you have before you involve 179 channels, of these, 171 channels will be imported, as is, from the United States. On the other hand, only eight of these 179 channels or less than five percent will be produced in Canada. SOCAN is concerned that the satellite radio applications run afoul of the Broadcasting Act for at least two reasons. First, by only providing eight Canadian channels out of a total of 179 channels, these applications do not satisfy the requirement that a maximum use be made of Canadian creative resources.

5635 Second, the applications have not discharged the onus of establishing why satellite radio renders the use of Canadian content impracticable. Last Monday, the Globe and Mail reported and I quote, "Stewart Lyons, Executive Vice-President of Canadian Satellite Radio, said asking its U.S. partner for more Canadian channels would be a significant problem as XM has already agreed to drop some of its U.S. slots to squeeze in the four new Canadian listings."

5636 Mr. Chairman, the fact that they were able to squeeze in four new Canadian channels demonstrates that it is not technically impossible or impracticable to use Canadian content. As a result, it is clear that CSR's excuse for making use of a minimum Canadian content does not meet the requirements of Parliament enacted in the Broadcasting Act. The bottom line is that a Canadian content ratio of one to 25 or one to 20 does not meet the requirements of the law.

5637 If I can move to the Commission's longstanding practice, in addition to the statutory problems if the Commission approves these satellite radio applications in their present form, you will depart from past Commission practice for no good reason. The Commission does not allow Canadian television, satellite and cable companies, for example, to import services consisting of the delivery of American programming, as is, and dump it into the Canadian market. For the same reason, we believe that the Canadian satellite radio companies should not be allowed to make minimum use rather than a maximum use of Canadian creative resources.

5638 SOCAN would also like to point out to the Commission's decision to grant the Al-Jazeera television station carriage in Canada also stipulated that the Canadian distributors must ensure that the channel's content meet certain requirements when broadcast in Canada. Mr. Chairman, this Commission has made it clear that foreign programming cannot be imported into Canada on an as is or take it or leave it basis. There is no reason to depart from the Commission's long established past practice in this case.

5639 Finally, the third point, the Commission should not create a dangerous precedent. If the Commission creates new rules for satellite radio, you must carefully consider how these new rules will impact on your upcoming commercial radio review. As subsection 3(2) of the Broadcasting Act states, "The Canadian broadcasting system constitutes a single system." The present satellite radio applications therefore cannot be considered in isolation, they are indeed part of a single system.

5640 I would also like to draw the Commission's attention to the recent Supreme Court of Canada decision, SOCAN and the Canadian Association of Internet Providers in which the majority of the court held and I quote, "Canada clearly has a significant interest in the flow of information in and out of the country. Canada regulates the reception of broadcasting signals in Canada wherever originated."

5641 In sum, SOCAN submits that the satellite radio applications cannot ignore Canada's Broadcasting Act, the Supreme Court of Canada and the Commission's past and future role in regulating the Canadian broadcasting system. Allow me to conclude by briefly responding to the first question the Commission asked in its July 8th notice, namely: "What is the appropriate amount of English and French language Canadian content that this new service should provide to satisfy the objectives of the Broadcasting Act?" As SOCAN stated in its September 15th submission, "Each of the applicants should meet or exceed the Canadian content requirements on each music channel that it broadcasts in the same percentage that applies to radio stations that feature similar formats, consistent with the fact that these services have more music, their Canadian content requirements therefore should be commensurate with that reality and feature more Canadian music, not less."

5642 Moreover, this may mean that these services have to provide more made in Canada signals. Mr. Chairman, members of the Commission, today I focused on your Canadian content policies because of the critical role that Canadian content plays in determining the livelihoods of SOCAN's Canadian members. SOCAN remains confident that the Commission will continue to play an important role in promoting the objectives of the Broadcasting Act, as you have done so effectively in the past.

5643 I thank you and I would be pleased to respond to any questions.

5644 THE CHAIRPERSON: Thank you. Commissioner Langford.

5645 COMMISSIONER LANGFORD: Thank you, Mr. Chairman, I think I will follow your lead, sir, because we do have your written submission and I too will focus on today's presentation of Canadian content. And, we may end-up getting into a discussion on the true meaning of 3(1)(f) of the Broadcasting Act. But before we do, let me put a general question to you, because we have had lots of conversation in this room this week about the notion of balance and realities. What if the realities, despite your take on the Globe and Mail's report, what if the realities really are... and I make no editorial comment on my opinion of this reality, but if the realities really truly are that four or five, at this point, Canadian channels are all that are available, that is it, there are no more available, it doesn't matter whether it is the applicants in front of us who go to XM and SIRIUS in the States or a new set of applicants in six months or a new set of applicants in a year, after that I am not so sure about compression realities and technological, but at this time, in this timeframe, only four or five channels are available period.

5646 Now we are stuck with the question of balancing that reality run by Canadians, managed by Canadians with some CTD, Canadian talent development, some royalties coming to your people, some more room for expression, a new avenue to express their, you know, your composers, lyricists, songwriters' work versus the grey market where the satellites are up there, the stuff comes in, people buy a tiny little box and plug it into their car and away they go. How do we balance those two in your view? Which is the best avenue to go down?

5647 MR. SPURGEON: Well, in light of the law, I don't think you can balance it. If you want to do business in Canada, you have to abide, you have to comply with Canadian law. It's as simple as that. It doesn't matter whether you are selling pharmaceuticals or whatever, you have to follow the law and I don't know whether a balance can be achieved.

5648 I don't know whether they can do business in this country because of the fact that Parliament has said you must use a maximum amount of Canadian resources and they simply have not demonstrated--I shouldn't say all. I think has CHUM has demonstrated that, but I don't think the other two have demonstrated that.

5649 COMMISSIONER LANGFORD: Well, if that's your simple answer, that you can't, I mean, it's clear and there's not much point going on. But let me try one more hypothetical for you just to see if I can kind of convince you to help us with just your views on the balance idea.

5650 Let's assume that going to section 3.(1)(f), a court would look at that phrase, "the nature of service" and say, "Well, you know, the examples given, in terms of format and whatnot, are not exhaustive" and we rule that technological constraints are every bit as relevant as format concerns and the other ones listed and that, therefore, the Commission is within its regulatory authority to take cognisance of the "nature of service" argument and to say, "Look, that's all they can get at this point and that's the best deal they could get for Canada", so we go ahead, hypothetically now, and we license it on that kind of a legal opinion--or we have to decide to license it, I should say.

5651 Do we license it and take the five channels and the extra 2,000 hours from one applicant and other input from other applicants, as some of the intervenors, who are songwriters and performers, have suggested we do? Or do we leave it open to the grey market, because, as Telesat Canada said, we cannot duplicate the technology here, we cannot duplicate the "eye in the sky" here? What's the better trade-off? What's the better decision?

5652 MR. STURGEON: Well, first of all, I'm not too sure the extent of the grey market in this particular field. I think there have been numbers bandied about about the number of cars that might have--probably some people think it's cool to have it, but as a mass communication or mass adoption, I don't think there's that much grey market, say, compared to what there is on satellite.

5653 But getting back, you were talking about you can't get in the way of technology. That's an admirable statement, but, first of all, I think--and you are a lawyer, I think, I believe you are--

5654 COMMISSIONER LANGFORD: I'm a recovering lawyer, yes.

5655 MR. STURGEON: I thought the other section that followed trumped that section. In other words, you have to look at section 3.(1)(f) as being the overarching provision in the event that one of those provisions, including the technology--

5656 COMMISSIONER LANGFORD: No, but I'm finding a way of getting around inside 3.(1)(f) using the "nature of service" argument.

5657 Anyway, really, if you don't mind getting into this, what I don't want to discuss is a legal opinion. Basing the hypothesis on the notion that somehow our lawyers come up with a legal view that we can do it and that the courts support us, what's the best way to go? Do we leave it to the grey market? Or do we take your view stated here today, and others--you are not alone in this--that the Canadian content simply isn't enough, don't do it?

5658 MR. STURGEON: Well, I think you have a difficult job. I don't know what the technical capabilities of these services are to program more Canadian music either, on each service or to add more. I mean, they are saying that they can't.

5659 What are you talking about? You are talking about a North American market here. But your job isn't to license for a North American market. Your job is to license for Canada, and Parliament has stated that. So I don't know if I can add any more to that.

5660 COMMISSIONER LANGFORD: I mean, basically what I'm saying is, if it's in Canada, anyway, are we--reduced to its more colloquial terms, if it's coming anyway, are we better to license it and get what we can out of it?

5661 MR. STURGEON: Yes. Is it coming anyway? I don't know that.

5662 COMMISSIONER LANGFORD: Well, we are told it's here. How much of it is here, we don't know.

5663 MR. STURGEON: For the most part, on cable and satellite--or the satellite black and grey market is a problem, but the average--most Canadians subscribe to CRTC-licensed BDUs. There's still the incidence of--so I think that's the way it works in this country, for the most part. There is always going to be leakage, but, for the most part--

5664 COMMISSIONER LANGFORD: To move quickly to your second point on the long practice, does it comfort you to know that both of applicants for satellite distribution undertakings here this week have agreed to comply with, if I might loosely put it this way, the Al Jazeera precedent, and to be responsible for the signals they--

5665 MR. SPURGEON: That's gratifying to hear that, that they would do that, yes.

5666 COMMISSIONER LANGFORD: Okay. And with regard to your third, the precedent it would set--and you looked back on the fact that there were exceptions. Those exceptions were all made in the context of real situations.

5667 Let's take a very simple one that was brought up yesterday. We looked at border stations in Windsor, Ontario and said we can't constrain them with the same Canadian content rules because they will just be murdered by the Detroit competition. We looked at oldies sometime ago and, depending on the age of the oldies, there's not as much Canadian music around, so we made a special rule for them.

5668 So we made exceptions, but we don't just wake us and say, "Hey, let's make an exception today, we haven't done one for a while". We get an application that puts it in the context of the realities constraining the applicant.

5669 If we put this situation that's before us today, in the context of the realities that constrain the two applicants--this is for satellite distribution--is it fair to look back and say, "Well, we have never done anything like 1 in 25. The best you have ever done is 1 in 10 or 1 in 7", or something like that? Is it fair to look at it that way? Or is it more fair, despite everyone's love of Canadian content, to say, "Well, we just have to look at it in the realities of what's there"?

5670 MR. STURGEON: Well, I mean, even on television, for the movies, I think it's a 1:12 ratio.

5671 COMMISSIONER LANGFORD: But this isn't the movies.

5672 MR. STURGEON: That's right. But there's more Canadian music than there is Canadian movies. I think it's one thing to say you had to make an exception for the Windsor station. Here we are talking about channels of music, discrete channels of music, which can sustain Canadian content far in excess of what is being promised. And it's doable, it's practicable, as the act would say, and that's the concern.

5673 I mean, you are saying, "Well, there's constraints" or "We have special circumstances". Well, I mean, the fact is it can be done because there is a music industry that is feeding product into the marketplace that can fill the required number of slots.

5674 COMMISSIONER LANGFORD: Yes, but, with respect, it seems to me that you are limiting your argument to available product and available capacity. But there's a third element, and that's the willingness of the American corporate individuals that own the capacity. How do we cross that hurdle? How do we get that through the practica--I can't pronounce that word.

5675 MR. SPURGEON: Practicable, yes.

5676 COMMISSIONER LANGFORD: It's like phenomenon-enon-enon-enon-enon-enon, I never know where to stop.

5677 MR. SPURGEON: Well, that's a problem. Again, we are importing something "as is" into a marketplace and that is a fundamental problem with this kind of a business model, unlike anything you have done before. That's why I'm saying you really have to consider what impact it's going to have on everything else that you are looking at, and, for that matter, anything.

5678 COMMISSIONER LANGFORD: We are back to the fact that we are not importing, it's already here.

5679 MR. SPURGEON: Well, it's not for me. I don't have it in my car. I mean, my view is that radio is radio is radio here. I think maybe Duff Roman might have said that. That's why they call it radio, satellite radio. Just like television is television is television and you have TV that is cable and over-the-air. But to the consumer, all it means is you turn on your television and you get a signal, and that's what people are going to use this delivery as, a radio medium.

5680 COMMISSIONER LANGFORD: A little like saying the wives are wives are wives, what we just heard from the last intervenor that 50 per cent of Canadian male population envy this guy who has a special one, apparently.

5681 Thank you very much.

5682 Those are my questions, Mr. Chairman.

5683 MR. SPURGEON: Thank you.

5684 THE CHAIRPERSON: Thank you. Thanks very much.

5685 Mr. Secretary.

5686 THE SECRETARY: Thank you, Mr. Chairman.

5687 The next appearing intervention will be presented by Canadian Music Week, Mr. Neill Dixon.

INTERVENTION

5688 MR. DIXON: Good afternoon.

5689 I would like to thank you for your invitation to attend today's hearings. I have intervened in the past, but I have never actually sat through an entire--or, I guess, the last three days. It's been quite enlightening for me. I must commend the Commission on the job that's very thorough. I don't envy your task in making these decisions because I have heard a lot of things over the last few days that I wasn't aware of.

5690 To introduce myself, for those of you that don't know me, I'm president of Canadian Music Week. Canadian Music Week has established itself over the last 22 years as Canada's largest premier music event, promoting new Canadian talent.

5691 Now considered something of an institution in the Canadian music industry, Canadian Music Week includes a week of showcasing new talent. Over 350 new and up-and-coming bands perform throughout venues in Toronto. We do continuing education for both the music industry and musicians, that goes over a four-day period, as well as a number of award shows showcase talent searches, keynotes, mentoring sessions, that sort of thing.

5692 Canadian Music Week has worked closely with the radio industry over the years to produce many home-grown talent searches and local radio award shows that promote emerging Canadian talent. Many of today's biggest stars got their first break at those events and at Canadian Music Week.

5693 I'm here today to support the application, actually, of all three applications or applicants for subscription radio services in general. The reasons that I'm doing that is we believe that, for the following reasons, really.

5694 One, we believe that digital is the future. Since the early nineties, we have witnessed a lot of introductions at Canadian Music Week of pending technologies that were going to--may or may not impact the music business. We have seen a lot of people sort of hide their head in the sand, and I don't think we should. We should learn from the mistakes of the past.

5695 One of the problems that the major labels have today is the fact that they ignored the warning signals of digital music, the Internet, and didn't take the precautions or the necessary steps at the time to fix them or take advantage of them or embrace them, as the case may be.

5696 As far as satellite radio goes, from what I can gather, it's the fastest growing consumer electronic adaption in the history of this type of thing, perhaps with the exception of the iPod.

5697 As far as for the listeners, it offers a--all services offer a wider variety of consumer choice. They are not available on conventional radio at the moment.

5698 For musicians and artists, it's an outlet for the underserved categories or genres of music that are not currently heard on conventional radio today.

5699 And then, finally, again, I guess, in support of the satellite services, there is access to the U.S. market, which I think that Bruce and Dallas pointed out the other day were important for Canadian musicians to gain access to that market.

5700 Now, I want to speak to that just briefly. Prior to running Canadian Music Week, I started, owned and operated, one of Canada's most successful labels, Solid Gold Records. It ran for just over 10 years and Bruce Good, the Good Brothers, were one of our managed artists and they were on the label.

5701 In the eight years that we looked after his career, we managed to get him eight Juno Awards and two gold record. I don't think he has managed to do that since, but since that day it has been a lot tougher to get that type of music on radio.

5702 One of the most difficult things we had to do in promoting independent music on an independent label was getting it outside this country.

Canada is only a 2 per cent of the world record market and you can't have a complete career by just staying in Canada.

5703 So, as much as we appreciate the fact that the 35 Canadian content is there that gets artists started and boost their career, the opportunities that satellite radio offer are sort of unprecedented for Canadian artists.

5704 I would like to sort of address some of the applicants' benefits that they are promised as they relate to Canadian talent development.

5705 Now, we believe that conditional licence, as some of the other interveners have mentioned depends on Canadian content levels, Canadian talent development contributions and in some cases D.R.M.

5706 The benefits that the satellite that we kind of particularly like about the satellite applications is particularly the access to the U.S. market.

5707 Now, although they haven't identified a fixed percentage and they can't guarantee beyond the Canadian 100 channels that will air in the U.S. which, by the way, has never done before either, they are already airing about 2 to 3 per cent Canadian on their current channels that they do air without any intervention or help and they are going to address that by putting in what I would call sort of a lobbyist in as far as I know in New York and Washington in their studios to make it accessible to the 50 or so programmers that look after their stations, to help Canadian independent companies access those airwaves.

5708 And again, as a record promotion, ex-record promotion guy, that would be an incredible boom. That was not available to me when we were running our independent label.

5709 The satellite service, XM satellite service, Canadian satellite radio, has promised to support Canadian independent music here in this country through the support of the Canadian Independent Music Awards.

5710 Now, that's a venture that Canadian Music Week started five years ago, investing in the future because we realize our future is with independent music as the majors consolidate and get smaller and because of the access to different airwaves and the sort of empowerment of musicians and music-makers to get on different airwaves, including the Internet the independent music sector is going to grow in Canada and one of the benefits is the support that has been offered to that sector through C.S.R.

5711 Currently, 30 per cent of the nominees and, by the way, there is 22 categories in the independent radio musical... sorry Independent Music Awards and they cover a lot of categories that do not get played on conventional radio.

5712 So, you would have bluegrass, you would have blues, you would have country, you would have hip-hop, you would have jazz. There will be a number of categories, world music, rhythm music, you name it. There is 22 categories.

5713 Thirty per cent of those nominees have already received air-play on XM in the U.S. so we know that they are already through their niche channels programming a lot of this independent music that receives zero air-play here in Canada.

5714 Standard radio with their proposal has got a meaningful support. As I've mentioned, one of the hardest things for Canadian independent labels is to access to the U.S. market. One of their suggestions or, I guess, promises, is I guess almost a program where they would assist Canadian independent artists to launch their careers in the U.S. by showcasing at major U.S. festivals, such as South by Southwest and CMG in New York.

5715 It's pretty hard for an independent act to get without major label support these kind of showcases opportunities or get in front of the right people and I think that some of the talent searchers and sort of meaningful support in the United States, which is close to 40 per cent of the world market is extremely beneficial to Canadian artists.

5716 On the CHUM Astral side, they've addressed some of the major issues that have been raised here over the last few days. We like their made in Canada approach, they have great predominance to Canadian music through their promise of a number of channels that are offering 35 per cent Canadian content.

5717 They are also offering to, again, support in Canada the service is going to give current formats to the genres that are not currently being supported through conventional radio. So, this is all good news for Canadian artists.

5718 I mean, we're all about Canadian. We are not 35 per cent Canadian, we're like 100 per cent Canadian. So, anything to promote Canadian music is good in our ears. Thank you.

5719 THE CHAIRPERSON: Thank you. Commissioner Williams.

5720 COMMISSIONER WILLIAMS: Thank you for your presentation and your intervention has been extremely thorough.

5721 If I understand you correctly, other than the specific benefits you've just referred to, your main reason for support to the proposed Canadian channels will have exposure to a continent-wide XM service and broadcast directly in the world's largest consumer market?

5722 MR. DIXON: Absolutely.

5723 COMMISSIONER WILLIAMS: That's the main thrust of your intervention today?

5724 MR. DIXON: Absolutely, but I also think the technology elements discussed about the grey market. I have got two girls in college right now and their friends have already got XM. They were first early adapters of IPOD and to my chagrin, they were downloading P to P music years ago.

5725 I believe it's coming, regardless. I don't think you can hold back progress and I think it's something that the Commission has to deal with. I don't think it's something you can put on a shelf and wait and see what happens.

5726 COMMISSIONER WILLIAMS: Okay. Thank you. I have no further questions, Mr. Chair.

5727 THE CHAIRPERSON: Thanks very much.

5728 MR. DIXON: Thank you.

5729 THE SECRETARY: Thank you, Mr. Chairman. Interveners numbers 12 and 32 have swap numbers, so... maintenant nous entendrons la demande de l'intervention présentée par SONOGRAM, monsieur André Grenier.

INTERVENTION

5730 M. GRENIER: Bien, le bonjour. Ça va bien? Ça ne sera pas long; on va à la vitesse de la technologie. Je vais ouvrir mon document. Je vais vous parler en français, il n'y a pas d'objection. Alors, je vais me présenter.

5731 André Grenier de SONOGRAM. Nous sommes une entreprise québécoise qui oeuvre dans l'industrie de la musique depuis, je vous dirais, 20 ans, à différents niveaux. On a eu l'occasion de collaborer avec différents artistes.

5732 À la base, nous sommes un studio d'enregistrement, donc nous voyons à la base même de ce pourquoi nous sommes ici. On a aussi une maison de disque, donc on a à vivre avec les problèmes de distribution de disque, on a à vivre avec les problèmes de download, pour utiliser le terme et on vit aussi avec les Droits d'auteur parce que nous avons une maison de disque qui est membre à la SOCAN. Notre maison est enregistrée aussi à l'ADISQ.

5733 Nous collaborons aussi avec différentes agences de production, nous travaillons dans le milieu du clip et de la production de publicité télé.

5734 Savez-vous que près de 2 000 chansons francophones ont été enregistrées et distribuées cette année seulement qu'au Québec? De ce nombre-là, il y a seulement que 80 chansons, et ça représente moins de 5 pour cent qui sont diffusées sur les ondes au Québec.

5735 Imaginez combien de chansons d'artistes, de disques qui sont faits à chaque année et qui ne trouvent pas de fenêtre, de porte et d'antenne pour être diffusées.

5736 Grosso modo, sur une période de sept ans, 15 000 chansons francophones pour la durée de la licence que Astral et CHUM vous proposent, c'est un manque flagrant d'options de diffusion pour tous les créateurs.

5737 Que vous preniez un endroit comme Montréal, combien y a-t-il de stations de radio AM et FM de langue française et anglaise, et malgré toutes ces stations-là, on ne réussit à diffuser 80 chansons de format dits air-play ou commercial.

5738 Pourquoi? Parce qu'on est dans un monde, comment dire, avec toutes les options de diffusion, ce sont des stations de radio qui sont commerciales. Ils ont des objectifs, des quotas de vente à atteindre et ils se doivent de suivre ce que l'auditeur veut.

5739 Avec deux stations francophones et deux stations anglophones pour tout le Canada que les deux autres propositions qui ont été déposées, je trouve que c'est un grand grand manque de respect pour mon intelligence.

5740 Et quand je dis «manque de respect», c'est qu'en voulant me faire accroire qu'en tant que citoyen, deux stations francophones vont combler toutes les attentes de ces gens-là alors qu'une ville comme Montréal qui a, au plus, minimum, 10 stations de radio, on parle juste de français, n'est pas capable de combler moins de 5 pour cent des productions de chansons d'artistes canadiens francophones, et là je ne parle même pas des chiffres anglais. On se concentre sur mon marché de ce que je connais.

5741 Il n'y a pas de mot, en plus, pour expliquer qu'une société d'état comme Radio-Canada qui fait une demande avec mes frais, mais qui fait une demande de société lucrative, je ne sais pas trop quoi, pour être éligible à un programme, je trouve ça complètement aberrant.

5742 Puis quand on parle des problème de radio commerciale, c'est qu'ils doivent suivre les tendances. Quand M.N.M. fait un hit aux États-Unis ou que Britney Spears montre son nombril, bien CKOI est obligé de faire jouer Britney Spears parce que la petite fille, elle veut l'entendre, mais pour les gens que ça ne les intéresse pas, il n'y a pas d'autre alternative pour les jeunes que d'écouter ça.

5743 Ou bien ils vont sur le web. Sur le web, il n'y a pas de redevance, ils vont sur uk.com, ils vont partout, alors qu'avec le projet d'Astral et CHUM, la population pourra évoluer, okay, avec sa radio numérique. Puis quand je parle de «sa radio numérique» puis que je parle d'évoluer, c'est que vous, mesdames et messieurs, dites-moi ce que vous écoutiez à 30 ans comme artiste? Mais dites-moi aussi ce que vous écoutiez quand vous aviez 15 ans.

5744 Vous avez évolué. Ce qui était bon à 15 ans l'est moins à 30, ça vous rappelle des souvenirs, mais vous avez vécu d'autres choses.

5745 On ne peut pas réaliser toute l'ampleur que la musique prend dans nos vies. Au cinéma, dans l'auto, dans le métro, dans l'ascenseur, à l'épicerie. Partout elle est là, elle est présente, mais elle est contingentée à certains créneaux musicaux.

5746 Il n'y a pas de place pour découvrir des choses puis quand on parle d'âge et de musique, vos enfants qui ont 15 ans, 20 ans, ils n'écoutent pas la même chose qu'ils vont écouter lors de leur mariage, mais s'ils ne connaissent pas d'autre chose, si on ne leur offre pas d'opportunité de pouvoir écouter ce que le Québec, le Canada produit.

5747 Avec le projet d'Astral CHUM qui donne accès au peuple canadien, en fonction de ses goûts, en fonction de son âge, la grande diversité de notre population, et quand je parle de diversité, on parle de jazz, on parle de bouton d'or, on parle d'énergie classique, on parle de wrap. Le classique, je n'aime pas . Pourquoi? Parce que je ne peux pas en écouter, j'ai pas pu en découvrir.

5748 Toute musique est bonne à être entendue. C'est un peu comme les saucisses; plus de gens en mangent parce qu'elles sont plus fraîches puis elles sont plus fraîches parce que plus de gens en mangent.

5749 Si tous les gens pouvaient en écouter du wrap, du hip-hop, du techno; j'ai fait découvrir M.N.M. à ma mère, elle a 60 ans. Ah! bien, elle ne comprend pas tout, mais la musique, c'est l'fun, ça danse. Mais à Cité Rock Détente, il n'y en a pas du M.N.M. puis CKOI, de par les propos musicaux, de par les jokes, de par le contenu, ça ne la rejoint pas.

5750 Donc, elle est confinée à rester dans les une ou deux stations qu'elle peut recevoir, alors que si on offre une chaîne... écoutez 9,95 $ pour 50 stations de radio de qualité numérique en partant, parce que je sais que l'objectif c'est de monter à 100, vous avez un rayonnement de la culture québécoise de Vancouver à Terre-Neuve, donc la personne qui va pour un poste en Alberta qui veut continuer d'écouter de la musique francophone, il peut le faire.

5751 Vous avez un rayonnement de la culture québécoise de Vancouver à Terre-Neuve. Donc, la personne qui va pour un poste en Alberta, qui veut continuer d'écouter de la musique francophone, il peut le faire.

5752 Vous avez dix stations francophones pour faire découvrir ce que les indépendants, les record labels, on parle de hip hop, de techno, de rock alternatif, de rythmes du monde, de folk, à un moment donné on se perd. On ne peut pas tous les contingenter dans deux stations de radio francophone pour tout le Canada. C'est inimaginable. De là, on ne parle même pas de leur programmation, de talk radio.

5753 Je m'excuse, mais du talk radio, quand tu es en auto, normalement, tu es en vacances à Banf, c'est de la musique que tu veux entendre, ce n'est pas le doc Mailloux qui te dit ce qui se passe à Montréal. En tout cas, dans ma perception.

5754 En plus d'être visionnaires, Astral et CHUM, dans les services qu'ils vous offrent, ce n'est pas du dumping de culture de 97 chaînes américaines ou de réchauffement de recettes de radio montréalaise.

5755 Quand vous regardez le marché mondial de la musique aujourd'hui, il y a une seule chose qui fait l'unanimité, puis cette chose, ça s'appelle le « hi-Pod ». Le hi-Pod, c'est ce qui permet un certain contrôle du download parce qu'on peut payer, mais c'est important d'agir rapidement.

5756 On a manqué le détour. Le CRTC, avec Astral et CHUM, vous avez l'opportunité de contrer l'hémorragie que nous vivons présentement dans la musique et sur notre territoire.

5757 Quand je parle d'hémorragie, je parle qu'il y a des choses qu'on ne peut plus contrôler, la balle, elle roule, elle est partie. Là on a la chance d'implanter des choses structurées par des gens qui sont responsables, qui sont en place depuis des années, des lois, des états, des redevances ont été mis en place depuis ce temps-là.

5758 Pour ce qui est du mémoire déposé par l'ADISQ, en tant que membre depuis plus de dix ans de cette organisation, je suis dans l'obligation d'être en désaccord sur plusieurs points.

5759 Comme de dire qu'il est prématuré, écoutez, prématuré, ce n'est pas un accouchement qu'on fait. On parle d'audiences publiques, de redevances, de passer le concept, je m'excuse.

5760 De dire en plus que nous disposons de quelques années encore avant même d'envisager la possibilité du développement de la zone grise.

5761 Je m'excuse, à la vitesse où la technologie avance, si on n'agit pas rapidement, il va se passer quelque chose.

5762 Le CRTC a mis en place, au fil des années, des quotas, des redevances, du contenu canadien, du contenu francophone. Et Astral et CHUM s'engagent à remplir toutes ces obligations-là que vous avez fixées avec les années.

5763 Avec l'idée de prendre du temps pour voir venir le train, ce n'est pas le temps de le regarder, le train, c'est le temps d'embarquer dedans et d'y aller.

5764 Certains font dans le show. Moi, je fais dans la business. Au même titre qu'Astral et CHUM dans leur projet de radio numérique terrestre.

5765 Un des deux points positifs du mémoire de l'ADISQ, par contre, sur la diffusion de signaux de radio via un satellite américain, là je ne suis vraiment pas d'accord.

5766 Quand je vous regarde, messieurs dames, du canadian radio television and planification, et avec tout le reste que je vous dois, je ne vois que 13 drapeaux provinciaux et 1 canadien. Je ne vois pas le drapeau américain ici. Nous n'avons aucun contrôle, nous n'avons aucune influence et nous pouvons ne rien décider de ce qu'ils mettent en ondes et on n'a certainement pas voté pour eux lors des dernières élections par qu'on ne contrôle rien.

5767 Ce sont nos voisins, je les respecte, c'est excellent, nous sommes une population, une communauté et c'est important de se baser sur des assises qui nous ressemblent, qui nous permettent d'avoir une identité musicale.

5768 À Vancouver, tu ne peux pas avoir le même minding qu'au Nouveau-Brunswick parce que tu ne vis pas les mêmes choses.

5769 C'est pour ça, la seule raison que la seule alternative à la radio numérique est le projet mis en place par deux partenaires canadiens qui collaborent déjà ensemble depuis plus de 20 ans, et ça fait des alliés déterminés à en faire un succès de cette entreprise.

5770 Depuis environ cinq ans, la radio numérique est en place un peu partout dans le monde. Il est urgent d'offrir un service qui pourrait rejoindre les Canadiens,

5771 Pour avoir travaillé et voyagé en Alberta, en Saskatchewan, au Manitoba, dans l'Île-du-Prince-Édouard, évidemment au Québec, avez-vous déjà écouté, avez-vous déjà essayé, excusez-moi, je vais me permettre une petite gorgée, avez-vous déjà essayé d'écouter la radio en français à l'extérieur du Québec? C'est impossible. Pourquoi? Parce qu'il n'y en a pas. Parce qu'ils ne peuvent pas vendre de publicité, parce que les annonceurs, ils sont anglophones, et vice versa.

5772 Allez faire un tour au Lac-Saint-Jean et écoutez-moi de la radio en anglais, il n'y en a pas, ça n'existe pas.

5773 On parle d'avoir un pays bilingue, on parle d'offrir des cultures. Si tu ne peux pas découvrir des choses, tu ne peux pas les connaître. Si tu n'as pas d'options, si ce n'est que le web ou le download, on passe à côté de la track.

5774 Quand on regarde le projet de Radio-Canada qui veulent faire du dumping avec René Homier-Roy, Jacques Languirand par quatre chemins, quand tu es à Vancouver, je ne pense pas que ça puisse toucher les gens.

5775 Déjà que Radio-Canada rejoint 97 pour cent de la population via leur réseau. Il me semble que c'est déjà assez, 97 pour cent, nul n'est tenu à la perfection.

5776 De plus, Astral et CHUM, en tant que compagnies québécoises, auraient accès à une programmation de qualité canadienne pour découvrir leurs artistes, pas juste les Américains, mais donnez-moi des artistes américains, français, québécois, c'est ça qu'on propose, mais avec un, ça va être fait par des gens d'ici.

5777 Est-ce que quelqu'un veut payer pour faire découvrir notre culture francophone avec le genre de programmation mis en place par les deux autres demandes? Je ne pense pas.

5778 Quatre-vingt-dix-sept stations U.S. puis deux francophones, on est capable de programmer notre musique anglophone si on la veut, on est capable de mettre en place ce qu'on considère bon pour nos citoyens dans des heures et dans des créneaux adaptés à ce qu'on a comme référence culturelle. O.K.?

5779 C'est quoi la différence entre un artiste canadien francophone puis un artiste québécois francophone? Avez-vous déjà acheté un disque d'un artiste francophone qui n'est pas québécois? Non. Pourquoi? Parce que ça n'existe pas. C'est la simple et bonne raison.

5780 La diffusion est impossible. La distribution, inexistante. Comme l'ADISQ se définit comme l'association du Québécois, donc ce n'est pas dans ma cour, ce n'est pas mon problème.

5781 Parce que le Canada, c'est un pays, on parle d'une radio canadienne, mais on se concentre dans notre pays.

5782 Avec 50 stations offertes par Astral et CHUM, je suis convaincu que nous verrons d'autres Céline Dion, Brian Adams, Shanya Twain émerger d'un peu partout au Canada parce que le jeune de 14 ans qui est dans son sous-sol dans le fin fond de Banf va pouvoir peut-être découvrir un artiste québécois qui va l'inspirer parce que son père était d'origine et vice versa.

5783 Il va pouvoir découvrir une culture, pas Radio-Canada ou un talk radio, et pas Much et toutes les stations du web of.

5784 Vous avez beau faire le meilleur sirop d'érable, si personne ne peut y goûter, ça ne sert à rien. C'est un peu ça que je parle.

5785 Astral et CHUM proposent d'injecter de l'argent dans la roue du show-business; l'implantation d'un réseau, une programmation par des Québécois, par des Canadiens, du contenu francophone, du contenu canadien, des redevances aux auteurs compositeurs canadiens, de l'aide à des concours de mise en place Bref, aide-toi puis le ciel t'aidera et c'est ce qu'on essaie de faire.

5786 L'industrie de la musique n'a pas su s'adapter à la venue de l'Internet. Et je ne parle pas de l'industrie canadienne, je parle de l'industrie mondiale.

5787 Aujourd'hui, vous ave trois choix de réponse,

a) Astral et CHUM

b) CHUM et Astral

c) toutes ces réponses sont bonnes

5788 Un des signes de l'intelligence, c'est d'apprendre de ses erreurs. Pour une fois nous avons la chance de pouvoir offrir à nos enfants et aux générations présentes un produit digne de notre grande diversité culturelle.

5789 Le CRTC a une solution d'ici, par des gens d'ici, pour des gens d'ici. Et cette initiative nous est offerte par Astral et CHUM. Et je suis fier de l'appuyer en tant que humble humain qui est ici pour vous dire: Merci beaucoup de m'avoir reçu.

5790 LE PRÉSIDENT: Merci beaucoup, monsieur Grenier.

5791 M. GRENIER: Ça fait plaisir.

5792 LE PRÉSIDENT: Est-ce que vous avez vu... j'ai une copie, je ne sais pas si ça a été distribué en français, mais le « Phase I channel line-up » de la requérante CHUM et Astral?

5793 M. GRENIER: Oui.

5794 LE PRÉSIDENT: Est-ce que vous ave vu?

5795 M. GRENIER: Oui, je l'ai, je peux la sortir ici.

5796 LE PRÉSIDENT: Chez vous, votre compagnie, quelles sortes de disques est-ce que vous produisez?

5797 M. GRENIER: À la base, nous sommes un studio d'enregistrement. Quand un artiste vient enregistrer un disque puis qu'il va injecter entre 25-50 000 $ parce que son père a hypothéqué une partie de la maison, parce que sa cousine y croit, il dit: Bon, moi, je veux jouer à la radio, faut que je passe à CKOI parce que si je ne tourne pas à la radio, je ne vends pas de disques. Si je ne vends pas de disques, je ne fais pas d'argent. Si je ne fais pas d'argent, je ne fais pas de spectacles. C'est une roue qui tourne.

5798 Donc, les gens, ils sont confinés à faire toujours un peu le même style, un peu folk, pas trop pop et il y a des chansons, et on a eu un hit mondial qui sont des Croates qui s'appellent Bloomgabadi ou je ne sais pas quoi, il n'y a personne qui comprend rien, mais c'est bon puis ça se danse. Mais les gens ne se risquent pas à faire ça ici au Québec parce qu'on veut rentabiliser, on est dans un monde capitaliste.

5799 LE PRÉSIDENT: Bon. Dans cette grille dont je vous ai parlé.

5800 M. GRENIER: Oui.

5801 LE PRÉSIDENT: Si vous l'avez là. Dans quel endroit sur cette grille est-ce que vos disques que vous produisez tombent?

5802 M. GRENIER: Je ne produis pas de disques.

5803 LE PRÉSIDENT: Ah bon.

5804 M. GRENIER: J'ai un studio d'enregistrement. Donc, les gens viennent chez moi. Mais ce sont mes clients.

5805 LE PRÉSIDENT: Mais vous-même, vous ne produisez pas de disques.

5806 M. GRENIER: Oui, je produis aussi, mais je suis dans le style, j'ai un band hip hop.

5807 LE PRÉSIDENT: Oui.

5808 M. GRENIER: On est révélation de l'année au Cameroun, artiste s'étant le plus illustré au Mali. On tourne dans 26 pays. J'ai un band techno, on fait des raves à 0400 du matin. Puis les gars m'appellent: « Viens voir le spectacle. » On est dans le prime time à 0600. Je me couche, je me lève à 0500 puis je vais voir le spectacle à 0600 du matin parce que ce n'est pas ma génération.

5809 Mais les jeunes qui sont là dans le rave puis qui dansent, ils ne peuvent pas en écouter de cette musique-là. Qu'est-ce qu'ils font? Ils vont la downloader sur Internet ou bien ils font des copies de CD.

5810 LE PRÉSIDENT: O.K. Les artistes qui enregistrent chez vous et vos disques vous-même, est-ce que vous trouvez ici une place pour eux sur la grille que vous...

5811 M. GRENIER: Absolument.

5812 LE PRÉSIDENT: Où ça?

5813 M. GRENIER: Bien, si vous me sortez la liste, ça va m'éviter de la sortir, ça va être moins long.

5814 LE PRÉSIDENT: Ah bon. Parce que je vois que six sur dix des canaux seront hit oriented ou adult contemporary oldies. C'est en jaune.

5815 M. GRENIER: Merci beaucoup.

5816 LE PRÉSIDENT: Je vais emprunter la grille de ma collègue.

5817 M. GRENIER: Doux Frissons, Les immortels, Pop 60, Québec Rock, 10 pour cent classique, Comedy Channel, c'est ça, oui?

5818 LE PRÉSIDENT: Oui, c'est ça.

5819 M. GRENIER: La zone des petits. Voyez-vous, j'ai un projet de faire un album pour enfants, ça va faire...

5820 LE PRÉSIDENT: Les boîtes jaunes.

5821 M. GRENIER: Comment?

5822 LE PRÉSIDENT: Les boîtes jaunes.

5823 M. GRENIER: Ce sont les boîtes jaunes, toutes les petites boîtes jaunes.

5824 LE PRÉSIDENT: C'est ça.

5825 M. GRENIER: Parfait. La zone des petits, j'ai un projet d'album pour enfants depuis peut-être trois ans. Si tu n'es pas une Carmen Campagne ou bien un Sesame Street ou un Disney, comment tu peux faire diffuser ta musique? Comment veux-tu accrocher les parents pour dire: Aïe, c'est bon, cet album-là pour mon enfant, c'est éducatif, c'est songé, c'est intéressant. Il n'y en a pas de place.

5826 Achetez un TV add à TVA ou bien à TQS ou bien à Radio-Canada pour annoncer un album pour enfants, avant même de savoir si tu vas en vendre parce que tu n'as pas de test market, tu ne peux pas faire de spectacles dans les écoles, parce qu'on s'adresse à des jeunes, il y a des mineurs, il y a des règlements, bon des choses comme ça.

5827 Donc, tu es confiné à faire un disque, à le mettre sur la tablette puis à espérer que la photo du kid, il fait sympathique puis que les gens vont l'acheter, C'est ça aujourd'hui.

5828 Alors que la zone des petits, je pense que qui n'a pas mis de la musique pour endormir son enfant.

5829 LE PRÉSIDENT: Non, le point de ma question, ce n'est pas que vous allez dans chaque boîte décrire...

5830 M. GRENIER: Non, mais ce que je vais vous dire, c'est que selon les boîtes qui nous sont offertes...

5831 LE PRÉSIDENT: C'est pour chercher votre opinion sur est-ce que dans ces boîtes-là, est-ce qu'elles créent assez de cibles pour la musique...

5832 M. GRENIER: Écoutez, il y en a 80 pour cent de plus que les deux autres demandes.

5833 LE PRÉSIDENT: Ça c'est vrai.

5834 M. GRENIER: La question, je pense qu'elle se répond d'elle-même.

5835 LE PRÉSIDENT: Mais je vois qu'il manque urban, ou rock alternatif, ne sont pas...

5836 M. GRENIER: Je pense que c'est de l'évolution. Il faut savoir que quand un projet est mis en place comme ça avec une licence de sept ans, avec énormément de bonne volonté de la part de faire un contenu canadien, je pense que les gens sont capables d'adapter, on parle du palmarès, on parle de Musique Plus Radio, on parle d'Émergence.

5837 L'évolution de la musique, le hip hop n'existait pas voilà cinq ans, et quand les Beatles sont arrivés, ça n'existait pas non plus. Et aujourd'hui ils existent.

5838 Donc, il faut savoir qu'on est dans un medium qui est en constante évolution selon les tendances, selon le rythme, selon l'état de la planète.

5839 Je pense que la programmation qui est offerte par CHUM et Astral permet, justement, d'évoluer selon les tendances et les besoins.

5840 LE PRÉSIDENT: Je vous remercie.

5841 Madame Wylie.

5842 M. GRENIER: Ça fait plaisir.

5843 CONSEILLÈRE WYLIE: Monsieur Grenier, justement, vous nous avez parlé de stations à Montréal que vous ne voulez pas de réchauffement de stations montréalaises. Évidemment, si on s'en tient au volet francophone de la demande, Astral, c'est justement un des coupables de ne jouer que 80 chansons.

5844 M. GRENIER: Astral n'a que deux stations de radio à Montréal sur..

5845 CONSEILLÈRE WYLIE: Oui, mais c'est un des coupables, je disais. Oui.

5846 M. GRENIER: Ils contrôlent peut-être 15 ou 20 pour cent du marché.

5847 CONSEILLÈRE WYLIE: Oui.

5848 M. GRENIER: Donc, il y a 80 pour cent qui n'est pas là.

5849 CONSEILLÈRE WYLIE: Mais laissez-moi finir.

5850 M. GRENIER: Avec plaisir.

5851 CONSEILLÈRE WYLIE: Ils nous ont dit qu'il y aurait, justement, de la diversité. Des 200 chansons, les autres 120 auraient une chance d'être à l'antenne.

5852 M. GRENIER: Je m'excuse de vous... ce n'est pas 200, c'est 2 000 chansons par année.

5853 CONSEILLÈRE WYLIE: 2 000 chansons. Alors, il y en beaucoup.

5854 M. GRENIER: Il y en a trop.

5855 CONSEILLÈRE WYLIE: J'ai discuté un peu avec eux, avec leur projet, comment on fait pour les tenir à la diversité et de ne pas avoir de réchauffement de stations montréalaises? De critères quelconques qui pourraient nous donner à nous... je vous donne un exemple, je ne vous dis pas qu'il est applicable, mais dans la demande, je crois, de XFM ou l'autre, je ne me souviens plus laquelle, on a donné comme barème, par exemple, qu'il y aurait un pourcentage de chansons qui n'auraient que 18 mois ou qui ne seraient lancées dans 6 mois, est-ce que vous avez des barèmes à nous suggérer pour les tenir à la nouveau, justement, et pas au réchauffement de ce qui existe déjà?

5856 Dans les boîtes jaunes, si vous regardez, palmarès, Musique Plus, Émergence et ensuite Québec Rock, est-ce que vous avez, vous, des critères à nous suggérer qui les tiendraient, justement, à jouer les 1 500 chansons qui ne sont pas jouées ou les 1 800 chansons qui ne sont pas jouées?

5857 M. GRENIER: Bon, il faut savoir que, présentement, tout ce qu'on se dit peut être écouté par le monde entier via le web et le CRTC. On vous a écouté mardi avec Martial et hier on a passé la journée, donc aujourd'hui, tous les gens peuvent communiquer avec vous.

5858 Dans mon bureau, mes employés, quand ils travaillent, ils n'écoutent pas la station de radio qu'ils peuvent avoir à l'antenne. Ils vont sur le web et ils vont trouver une station de radio alternative, dance, selon leurs besoins.

5859 Le critère, c'est que c'est un abonnement. Si les gens ne sont pas satisfaits à 9,95 $ par mois et qu'ils trouvent pas ce qu'ils ont besoin, ils vont laisser faire l'abonnement et comme on...

5860 COMMISSAIRE WYLIE: Un instant, un instant.

5861 M. GRENIER: Non, non, mais...

5862 COMMISSAIRE WYLIE: Ce n'est pas le rôle que, nous, nous jouons. Nous, le rôle que nous avons, c'est qu'il y a trois demandes devant nous et vous intervenez en disant qu'il y en a une que vous appuyez parce qu'elle est meilleure et elle va être plus... vous croyez qu'elle offrira justement cette diversité-là. Alors je vous demande simplement si vous avez des façons de les tenir à ça...

5863 M. GRENIER: Des méthodes?

5864 COMMISSAIRE WYLIE: ... puisque c'est ce que vous appuyez.

5865 M. GRENIER: Bien, effectivement, vous avez déjà mis en place, exemple, 65 pour cent de contenu francophone. Il y a déjà le 35 pour cent de contenu canadien.

5866 Il pourrait être approché de voir à ce que... mais de par la zone des petits, c'est sûr que ça va être des chansons pour enfants et tu ne peux pas toujours faire tourner la même chanson tout le temps. C'est comme la radio commerciale. Donc, il y a un renouveau qui va se faire automatiquement.

5867 Il va y avoir... une des bonnes méthodes, c'est une très bonne question. J'aime bien, vous êtes très pertinente dans votre interrogation, mais je n'ai aucune crainte à ça, parce que si les gens retrouvent la même chose qu'il y a sur la radio commerciale, il n'aura pas intérêt à y aller.

5868 Et comme ça va être des canaux très spécialisés, très émergents, s'ils veulent rentrer dans vos critères de 65 pour cent de contenu francophone, tu ne peux pas faire jouer Éric Lapointe 14 fois par jour. Donc, il faut que tu combles par d'autres choses.

5869 C'est de là qu'on va pouvoir aller chercher dans les 2 000 chansons, dans les 1 900 quelque qui ne sont jamais utilisées et il ne faut pas dire que c'est 2 000 hits, il faut se comprendre aussi.

5870 COMMISSAIRE WYLIE: Je vous remercie.

5871 M. GRENIER: Ça me fait plaisir. D'autres questions?

5872 LE PRÉSIDENT: Non, monsieur Grenier, mais merci pour votre intervention.

5873 M. GRENIER: Ça m'a fait plaisir.

5874 LE PRÉSIDENT: On va pauser maintenant et on reprendra à 2 h 00.

5875 We will resume at 2 p.m.

--- Upon recessing at 1250 / Suspension à 1250

--- Upon resuming at 1402 / Reprise à 1402

5876 THE CHAIRPERSON: Order, please. À l'ordre, s'il vous plaît. Monsieur le Secrétaire.

5877 THE SECRETARY: Thank you, Mr. Chairman. For the record, I would like to indicate that intervener number 33 will not be appearing. That intervention will remain on the record as a non appearing intervention.

5878 Nous entendrons maintenant l'intervention de l'ADISQ, madame Solange Drouin et madame Annie Provencher. Vous disposez de 20 longues minutes pour faire votre présentation.

INTERVENTION

5879 MME DROUIN: Alors, monsieur le président, mesdames les conseillères, messieurs les conseillers, je suis Solange Drouin, vice-présidente aux Affaires publiques et directrice générale de l'ADISQ. M'accompagne aujourd'hui Annie Provencher, directrice de la radiodiffusion et de la recherche de notre association.

5880 J'aimerais excuser d'abord l'absence du président de l'ADISQ, monsieur Yves-François Blanchet et du président sortant, monsieur Jacques Primeau qui n'ont pu nous accompagner, étant retenus par des obligations professionnelles incontournables pour peu que vous ayez suivi l'actualité du monde artistique au Québec ces derniers jours.

5881 Je suis certaine que vous comprenez leur absence et que vous n'en déduisez pas un manque d'intérêt pour cette audience qui a une importance capitale pour l'industrie de la musique et l'avenir du système canadien de radiodiffusion.

5882 J'aimerais aussi, avant de commencer... de commencer à commencer... dire que, évidemment, la position que l'ADISQ soumet aujourd'hui ne reflète bien sûr pas la somme de tous les besoins et les désirs de chacun des membres de l'Association. L'ADISQ est une association qui reflète plutôt le plus large consensus à l'intérieur d'une association.

5883 Alors, c'est ce qui, évidemment, a été entériné par le Conseil d'administration de l'ADISQ. Alors, c'est ce large consensus-là que nous vous présentons aujourd'hui, qui fait suite à notre, évidemment, intervention écrite.

5884 Donc, nous souhaiterions aussi vous demander l'autorisation de déposer un texte qui explicite plus en détail les observations et commentaires que nous comptons vous présenter aujourd'hui et qui s'ajoutent à notre intervention du 15 septembre.

5885 Nous aimerions aussi déposer en annexe à ce document une lettre d'appui émanant de la coalition des Syndicats de l'audiovisuel et de la Coalition of Canadian Audiovisual Union faisant état de leur appui à notre présentation et qui représente pas moins de 60 000 créateurs et producteurs de contenus de l'audiovisuel.

5886 Alors, est-ce que nous pouvons déposer le document? Ce document explicite un petit peu plus en détail ce que nous allons vous dire aujourd'hui. Oui, okay, d'accord.

5887 Donc, au nom du Conseil d'administration et des membres de l'ADISQ, je voudrais d'abord vous remercier de nous avoir invités à comparaître. Les entreprises indépendantes que l'ADISQ représente contribuent plus de 95 pour cent de la production de disques d'artistes canadiens francophones.

5888 En terme de contenu musical, c'est donc dire que les disques que produisent ces entreprises représentent la source primaire où s'approvisionnent les radios francophones du Québec.

5889 L'ADISQ aimerait souligner les multiples efforts du Conseil consacrés depuis plus de 30 ans pour encourager l'accès de nos artistes aux ondes publiques de la radio et ainsi favoriser l'accès du public canadien à ces artistes.

5890 En effet, nous l'avons dit à plusieurs reprises devant vous, les mesures que le Conseil a établies au fil des ans en terme de quotas, contribution au développement de talents canadiens, sont des mesures essentielles qui ont permis et qui permettent encore aujourd'hui d'atteindre cet objectif.

Vous le savez, l'ADISQ a toujours appuyé et même défendu ces mesures découlant des principes fondamentaux inscrits dans la Loi.

5891 À cause justement de l'importance que revêtent ces politiques, il nous semble que les questions fondamentales que soulèvent les projets des requérants auraient dû faire l'objet, comme nous vous l'avons dit dans notre intervention écrite, donc auraient dû faire l'objet d'un processus public distinct de l'analyse des demandes.

5892 L'ADISQ tient à souligner encore une fois qu'elle déplore la décision du Conseil de procéder quand même à un examen synchrone des questions de politique et des demandes des requérantes.

5893 Dans notre intervention écrite, nous avons fait valoir au Conseil qu'il aurait été hautement préférable que les demandes de tels services ne soient analysées qu'après l'établissement d'un cadre défini avec soin et après une étude approfondie de l'ensemble des enjeux à court terme et long terme.

5894 D'ailleurs, aux États-Unis, il a fallu plusieurs années afin d'évaluer les conséquences de l'autorisation de ces services. C'est en 90 que CD-Radio a déposé une première demande pour l'exploitation d'un système faisant appel à la technologie audionumérique par satellite. Ce n'est pourtant qu'en 1997 que la FCC rendait publique la politique qu'elle entendait appliquer à ses services.

5895 S'il était légitime aux États-Unis de mettre sept ans afin de déterminer les conditions devant encadrer ce type de service, il l'est tout autant de prendre le temps qu'il faut ici au Canada pour s'assurer d'une implantation conforme aux priorités découlant de la politique canadienne de radiodiffusion qui favorise, entre autres, le développement des contenus culturels canadiens et l'accès du public à ces contenus.

5896 À cet égard, nous sommes d'avis que les demandes dont est saisi le Conseil portent sur un type de service comportant un très fort potentiel de modifier à moyen et long termes les modes de diffusion et, surtout, de consommation de la musique. C'est ici où nous abondons tout à fait dans le même sens que ce qui vous a été présenté ce matin par la CRIA.

5897 Les services de radio à canaux multiples par abonnement possèdent plusieurs caractéristiques qui, selon nous, laissent supposer qu'ils pourraient éventuellement constituer des substituts au support physique dont la vente demeure à ce jour l'une des principales sources de financement de l'industrie musicale.

5898 C'est donc dire l'importance d'assurer une transition lucide et ordonnée vers ces nouveaux modes de diffusion de la musique. Une telle transition doit s'effectuer de manière à consolider les acquis découlant du cadre réglementaire actuel, non à les démanteler.

5899 Les récentes innovations technologiques combinées à la mise en disponibilité de la quasi-totalité des oeuvres musicales sur Internet ont secoué brutalement l'industrie de la musique et ce, à l'échelle mondiale. Toute l'industrie de la musique et plus particulièrement les entreprises canadiennes indépendantes que nous représentons ont peine à suivre le rythme que leur impose le tourbillon de la dématérialisation des oeuvres musicales.

5900 C'est donc à la suite d'une succession d'essais et d'erreurs, nous en convenons, que nos membres canalisent maintenant leurs efforts afin de présenter des solutions à la fois viables et attrayantes pour le public avide de musique dématérialisée.

5901 L'ADISQ estime que le potentiel de substitution que représentent les trois services proposés aujourd'hui ne ferait qu'accroître la vulnérabilité d'un secteur déjà fragilisé dans les profondes mutations technologiques dont il commence à peine à établir de nouveaux mécanismes de viabilité.

5902 À titre d'exemple, CSS reconnaît dans son mémoire supplémentaire qu'une proportion importante des auditeurs susceptibles d'être intéressés par ces services sont des amateurs d'enregistrements sonores sur CD.

5903 Aux États-Unis, l'une des entreprises pionnières de ce type de service se dénommait, comme je l'ai dit plus tôt, CD-Radio. Cette raison sociale à caractère très évocateur indique bien que la radio à canaux multiples par abonnement se positionne comme un substitut au support numérique. Ainsi, le concept de telles entreprises s'inscrit dans celui de la transformation des modes de diffusion et de consommation des oeuvres musicales.

5904 La démarche réglementaire devrait franchement s'inscrire dans la problématique plus large des évolutions que connaît la diffusion des oeuvres musicales à la faveur du développement des nouvelles technologies.

5905 Si de tels services sont implantés sans égard aux enjeux qu'ils posent, ils pourraient rendre futile un grand nombre de mesures mises en place au cours des années afin d'assurer la disponibilité et la diffusion d'oeuvres musicales et autres contenus sonores canadiens de qualité et destinés à un large public.

5906 L'ADISQ, vous le savez, s'est opposée lors de son intervention écrite à ce que le Conseil accorde à l'une ou l'autre des requérantes toute licence de radiodiffusion.

5907 Tant que ces questions qui mettent en jeu la viabilité de notre secteur ne sont pas banalisées pour cadrer à l'intérieur de l'ensemble des politiques canadiennes sur la radiodiffusion et de l'enregistrement sonore, l'ADISQ continuera de résister à l'attrait de cette technologie qui pourrait potentiellement causer la perte de tout un secteur producteur de contenu, soit l'industrie, évidemment, de la musique.

5908 Entendons-nous bien, l'ADISQ n'est pas contre le développement des technologies mais, malheureusement, le passé récent nous a enseigné qu'il doit être scrupuleusement étudié si nous souhaitons qu'il soit porteur du meilleur et non seulement du pire.

5909 De plus, nous sommes d'avis que l'innovation technologique utilisée par certains services proposés a servi les contenus musicaux et les politiques de radiodiffusion à des considérations qui sont totalement étrangères au système canadien de radiodiffusion et à l'industrie de la musique. Je m'explique.

5910 L'ADISQ est d'avis que SIRIUS et XM ne sont en fait que des tremplins servant à promouvoir et à mettre en marché les produits des grandes corporations du secteur de la fabrication automobile. Les objectifs de la Loi sur la radiodiffusion ne font pas partie de leurs intérêts premiers. Ils ont le contrôle ultime du contenu diffusé sur leurs canaux et ils peuvent exclure la concurrence.

5911 De plus, leurs récepteurs sont mutuellement incompatibles. Ce sont conséquemment des facteurs étrangers à la politique canadienne de radiodiffusion qui détermineraient l'accès aux ondes pour les artistes et à l'un ou l'autre des contenus pour le public, ce qui est, selon nous, tout à fait aberrant.

5912 Ce qui est aussi tout aussi aberrant pour nous, c'est d'entendre les requérants essayer de vous convaincre que ces services représenteraient une solution aux problèmes criants de la diversité.

5913 Comment les quelques canaux francophones a prédominance musicale peuvent-ils à eux seuls assurer la diffusion d'une diversité de contenus musicaux qui reflète toute la créativité des artistes locaux et qui, en même temps, répond aux exigences variées des Canadiens.

5914 L'ADISQ est d'avis que les producteurs de musique canadienne francophone pourraient plus souvent qu'à leur tour se retrouver devant des portes closes lorsqu'ils essaieront de partager le talent musical canadien de langue française via les ondes publiques dont dispose l'unique canal francophone à prépondérance musicale de XM et les deux canaux de SIRIUS, des deux canaux de SIRIUS.

5915 Sur la majeure partie du spectre qui exploiterait les multiples canaux des requérantes, de ces deux requérantes, nous n'entendrions ni la diversité de contenus musicaux francophones ni même une représentation de l'ensemble des genres musicaux produits par et pour les Canadiens.

5916 Par ailleurs, dans son mémoire supplémentaire, SIRIUS explique que les auditeurs francophones écoutent les émissions en français 91 pour cent du temps. Cela signifierait donc que la plupart des francophones débourseraient... seraient prêts à débourser 12,95 $ par mois pour écouter quatre chaînes francophones au surplus déjà disponibles pour 98 pour cent de la population canadienne et dans la plupart des régions. Il faudrait, selon nous, être vraiment naïfs pour croire une telle chose.

5917 Pour s'assurer que le droit à la diversité des contenus canadiens sur nos ondes publiques est bel et bien comblé, nous croyons qu'on ne peut se dispenser des mesures qui visent à assurer que les artistes locaux soient entendus. Le principe de la prédominance de ressources créatrices canadiennes est la règle établie dans la politique canadienne de radiodiffusion et la musique vocale de langue française, bien sûr, en est une partie intégrante.

5918 Les exigences de la Loi ne sont pas que des voeux pieux ou des invitations à faire son gros possible, mais des obligations pour l'ensemble des entreprises. Si, en raison d'une insuffisance des outils techniques ou de l'indisponibilité de certaines facilités, il s'avère impossible de mettre en place des modèles d'exploitation qui sont compatibles avec nos politiques, il faudrait, selon nous, plutôt en tirer les conséquences qui s'imposent.

5919 Nous souhaiterions aussi attirer votre attention sur une autre aberration, celle qui dit que cette fausse diversité aurait une chance d'avoir un impact sur le marché américain. Encore là, pour nous il faut vraiment vouloir convaincre ou encore ne pas connaître, ça se peut, comment se travaille une opération d'exportation pour dire une telle chose.

5920 Pour qu'une opération d'exportation d'un artiste, d'un talent canadien, ait une chance de succès, il faut une combinaison de plusieurs éléments bien sûr, dont fait partie la radio, mais aussi, ça prend une entente de distribution, ça prend une présence de l'artiste sur le marché et, évidemment, la radio fait partie de cet assemblage-là.

5921 Mais si la seule exportation, le seul élément d'exportation qu'il y a sur un marché c'est d'entendre une chanson à un moment ou à un autre sur un canal, sur un ensemble de canaux ou d'un service à canaux multiples, selon nous, pour nous c'est un coup d'épée dans l'eau qui peut seulement peut-être inciter les gens qui sont vraiment intéressés et qui ont été touchés par cet artiste-là à le chercher sur l'Internet et, finalement, se l'approprier gratuitement.

5922 Pour pallier aux déficiences flagrantes en matière de musique vocale de langue française et de contenu canadien, l'idée d'une compensation sous forme de contribution au développement des talents canadiens est tout simplement irrecevable.

5923 Les déficiences relatées en matière de diffusion de contenu et de musique vocale langue française en elle-même demeurent irrecevables et les contributions, quelles qu'elles soient ne peuvent se substituer à la diffusion d'une oeuvre musicale.

5924 Comme je le rappelais plus tôt, la Loi sur la radiodiffusion prévoit une obligation de contribution et de présentation et non pas une obligation de contribution ou de présentation.

5925 L'ADISQ estime d'ailleurs que la programmation non canadienne qui occuperait presque tout le spectre des ondes publiques qui seraient allouées à certains services pourrait même rendre futile les mesures que le Conseil a mis plusieurs années à élaborer en accord avec les industries de la radiodiffusion et de la musique.

5926 En fait, la prépondérance marquée de la programmation non canadienne présentée sous la forme de quelque 200 canaux dits spécialisés et qu'aucune formule ni calcul, disons-le, ne peut rendre apte et conforme aux politiques et à la réglementation canadienne, cette programmation non canadienne donc risque d'en imposer sans difficulté aux quelques canaux de programmation canadienne.

5927 En terme réel, il n'y a aucun montant aussi significatif soit-il, qui puisse à ce point contribuer au développement d'un talent canadien de manière à rééquilibrer le rapport de force entre les objectifs intéressés de ceux qui possèdent le contrôle ultime de la programmation des canaux et les artistes canadiens qui souhaitent y accéder.

5928 En conclusion, puisque XM et SIRIUS ont affirmé qu'elles ne pouvaient ajouter davantage de canaux canadiens, il est raisonnable de conclure qu'elles n'ont pas la capacité de se conformer aux exigences réglementaires.

5929 Ce n'est pas la technologie en elle-même qui empêche la diffusion prépondérante de services canadiens, mais plutôt la volonté ultime des exploitants réels de la technologie, soit XM et SIRIUS.

5930 L'ADISQ serait encline à déduire que C.S.S. et C.S.R. sont plutôt les propriétaires canadiens d'un concept de programmation et que le contrôle ultime de la programmation et de la distribution appartient plutôt à des intérêts non canadiens qui, sans égard réel pour les politiques canadiennes, ont comme priorité de faire la promotion de produits qui n'ont rien à voir avec le système de radiodiffusion.

5931 L'approche qui semble sous-tendre les propositions de XM et SIRIUS consiste à subordonner l'accomplissement des objectifs de la Loi aux limites techniques inhérentes à leur projet.

5932 Autrement dit, on vous demande de retenir une approche technologique inadéquate, un plan d'affaire incompatible avec les exigences mêmes de la Loi et l'on vient ensuite vous réclamer un régime qui déroge aux règles établies.

5933 Ainsi, C.S.S. explique que les satellites de SIRIUS ont une capacité déterminée, la majeure partie de celle-ci étant déjà mobilisée par le service de radio par satellite que SIRIUS exploite aux États-Unis. On affirme ensuite que SIRIUS a accepté de consentir à la diffusion de quatre chaînes de radio programmées par la CBC et la SRC en faisant exclusivement appel à des ressources canadiennes.

5934 En somme, la technologie utilisée comporte des limites intrinsèques, faisant en sorte que la programmation canadienne ne peut prétendre que quelques rares strapontins dans le système de SIRIUS.

5935 S'il est vrai que les possibilités techniques sont si limitées, au point de rendre virtuellement impossible la diffusion d'un nombre significatif de canaux canadiens et de canaux de musique vocale de langue française, il faut se demander s'il ne serait pas plus opportun de rechercher des alternatives plus conformes aux exigences de la Loi.

5936 Les approches de SIRIUS et de XM postulent qu'il n'y aura jamais de satellite canadien capable de procurer les facilités de diffusion qui seraient conséquentes avec les impératifs de la Loi. Si tel est le cas, il faut sans doute se tourner vers une autre option technologique.

5937 Admettre l'approche proposée par ces deux requérantes, c'est se résoudre à laisser une place limitée à la programmation canadienne en raison d'un choix discutable au plan des options technologiques.

5938 Par ailleurs, l'ADISQ reconnaît les efforts de CHUM et Astral visant à présenter un minimum de contenu canadien sur chacune de leur chaîne. Cependant, la disponibilité des chaînes francophones est nettement insuffisante. Dix canaux comportant plus ou moins 35 pour cent de contenu canadien ne suffiraient pas, selon nous, à assurer une diversité adéquate et suffisante de contenus musicaux.

5939 Pour toutes ces raisons et pour celles déjà invoquées dans notre intervention écrite du 15 septembre, nous vous soumettons encore une fois que l'ADISQ s'oppose fermement à ce que le Conseil accorde toute licence de radiodiffusion dans le cadre de la présente audience.

5940 Nous sommes maintenant ouvertes à répondre à vos questions.

5941 LE PRÉSIDENT: Merci. Madame Wylie.

5942 COMMISSAIRE WYLIE: Merci, monsieur le président. Bonjour, mesdames.

5943 La position de l'ADISQ quant aux besoins d'une audience de politique, avant de considérer attribuer une licence à quelque réclame que ce soit que nous avons entendu cette semaine est très claire, alors je n'y reviendrai pas.

5944 Mais si le Conseil décidait, par exemple, d'attribuer des licences ou une licence ou plusieurs, je ne sais pas si vous êtes prêtes à discuter des possibilités d'amélioration de ces services ou si, pour vous, il n'est pas question de donner quelque licence que ce soit.

5945 Par exemple, dans le cas de CHUM Astral, nous avons discuté avec eux des possibilités d'améliorer la situation que vous déplorez et qu'un jeune homme a déplorée aussi ce matin qu'il y a une minime proportion des pièces existantes qui soient accessibles aux antennes existantes.

5946 Évidemment, le groupe CHUM Astral nous a présenté, bien que vous soyez d'avis que 10 canaux ce n'est pas suffisant, nous ont présenté un nombre de canaux francophones.

5947 Est-ce que vous avez vu ce document que le président, ce matin justement, en faisait part au jeune homme qui était ici; monsieur Grenier, je crois?

5948 MME DROUIN: Je n'ai pas vu le document, mais j'en ai...

5949 COMMISSAIRE WYLIE: Vous savez de quoi il s'agit?

5950 MME DROUIN: Oui, bien sûr.

5951 COMMISSAIRE WYLIE: Et une des discussions que j'essayais d'avoir avec lui, mais sans grand succès, c'était : est-ce qu'il y a possibilité justement dans ces canaux francophones où CHUM Astral nous disent qu'il y aura... que sera radiodiffusée ou diffusée justement une diversité qui n'existe pas en ce moment? Est-ce qu'il a des barèmes qui pourraient être utilisés pour les tenir à cette promesse, à votre avis?

5952 Et justement je leur ai demandé, puisqu'on vous voit souvent, on vous connaît bien maintenant, est-ce que vous avez quelque chose à nous présenter qui satisferait Solange Drouin...

5953 MME DROUIN: Oui, j'ai entendu ça.

5954 COMMISSAIRE WYLIE: ... que, de fait, dans ces canaux-là on s'en tiendrait à la diversité et que ce ne serait pas ce que notre jeune homme ce matin nous a dit était, il ne fallait pas que ce soit un réchauffement des stations montréalaises existantes. Alors, voilà.

5955 MME DROUIN: Oui, mais écoutez, dans le cas de XM et SIRIUS, pour nous il y a des lacunes très très très très profondes, non seulement celles dont on a parlé aujourd'hui, mais les lacunes aussi en terme de contrôle de la propriété et, bon, évidemment, les pourcentages de contenus, vocal langue française et aussi de contenu canadien, on est vraiment à des années lumières de ce qui pourrait être acceptable.

5956 Quant à la demande de CHUM Astral, c'est clair qu'il y a plus de vertus dans ce projet-là que dans les projets de XM et SIRIUS.

5957 Mais, cependant, avec tout ce que vous avez entendu de la part de CRIA et de la part aussi de ce qu'on a dit aujourd'hui et aussi de CIRPA, pour nous le fait de penser régler le problème de la diversité ou ce qu'on a peur, notre préoccupation plutôt, c'est : étant donné que cette audience-là ne se fait pas dans le cadre d'une audience plus large sur la radio dans toutes ses formes évolutives, non seulement radio commerciale qu'on doit mettre à jour, radio numérique à s'implanter et aussi, évidemment, la radio par satellite, ce dont on a peur c'est qu'on «gettoïse» la diversité et qu'on dise, maintenant le problème de la diversité, on va le régler avec les services à canaux multiples puis même dans la proposition, on ne pense pas qu'on le règle, ce n'est pas ça que je dis, mais on a peur que ça soit «gettoïsé», de «gettoïser» la diversité.

5958 Et, ça, étant donné qu'on n'a pas la vision globale de qu'est-ce qui va se passer, parce que pour nous la diversité ça en prend sur les radios commerciales et ce n'est pas ... ça ne sera pas une panacée ce qui se passe sur la radio à canaux multiples.

5959 Alors, pour nous, il y a encore, malgré tout ça, des problèmes fondamentaux dans cette approche-là.

5960 COMMISSAIRE WYLIE: Mais entre l'absence de diversité et ce que vous appelez la «gettoïsation», ce n'est pas une amélioration, à votre avis?

5961 Ce que je vous demande, moi, c'est comment on peut améliorer la situation, pas comment arriver à ce qui est absolument optimal parce que ce que vous nous dites depuis plusieurs années et ce que le jeune homme ce matin nous a répété, c'est qu'il n'y a pas de diversité. Alors, voilà, on a une demande qui nous dit, bien, nous, on va en offrir.

5962 Vous, vous dites que ce n'est pas suffisant, ça ne se fera pas. Alors, ce que je vous demande, est-ce qu'il y a des façons...

5963 MME DROUIN: Oui, bien écoutez...

5964 COMMISSAIRE WYLIE: ... d'établir des critères qui seraient mesurables pour vous assurer. Il n'est pas question de dire nous allons faire ceci, cela, et nous essayons de voir ce qui est possible avec tout ce que nous entendons. Et puisque vous êtes là, je vous le demande.

5965 MME DROUIN: C'est ça, mais je vous dirais que juste déjà avec la liste des canaux qu'on a vus qui sont là, oui, qui sont proposés par CHUM Astral, je comprends votre préoccupation fort pertinente, madame Wylie, de poser des questions pour voir justement si ne serait pas du réchauffement, parce que de ce qui se passe déjà, ou une simple répétition de ce qui se passe déjà sur les radios commerciales générales, généralistes -- je ne sais plus comment les appeler -- et quand on pense, par exemple, que ces canaux-là sont très fourre-tout, comme lequel, c'est Les Immortels, musique des années 50, 60, 70, déjà, moi, ça sonne... ça sonne Réseau Boum; Doux Frissons adulte contemporain, pour moi ça ressemble à Rock Détente, ça ressemble à beaucoup de choses qu'on entend.

5966 Ce qui est offert comme canal, c'est encore déjà très très fourre-tout. On ne parle pas de niche très très marquée. On parle de probablement dans Doux Frissons, adulte contemporain, ça va ressembler beaucoup à ce qu'on entend déjà à la radio. On ne vois pas.

5967 COMMISSAIRE WYLIE: Essayez d'examiner ceux qui sont plus prometteurs.

5968 MME DROUIN: Émergence, celui de l'Émergence, oui, mais c'est un canal. C'est un canal sur les dix. Les autres...

5969 COMMISSAIRE WYLIE: En tout cas, c'est votre... ou Québec Rock, comment on fait pour dire, ça va être un canal rock, mais on va vous tenir à des barèmes ou des critères qui vont assurer qu'on va y jouer ou y diffuser des pièces qui ne seraient pas entendues autrement.

5970 Mais c'est pas mon domaine; c'est le vôtre. C'est votre intervention. Si vous dites, bien, vous ne donnez pas de licence à personne avant d'avoir une audience politique, on dit, non on n'en a pas besoin. Ne donnez de licence à personne. Vous allez peut-être en avoir une, voulez-vous l'améliorer. Vous allez peut-être en avoir deux.

5971 MME DROUIN: Écoutez, mais c'est parce que je pense que, nous, ce qu'on veut apporter aussi comme point supplémentaire puis ce qu'on a entendu de la part de CRIA haut et fort, c'est justement la fameuse dématérialisation de la musique.

5972 Je pense que le Conseil ne doit pas être insensible à ça et la façon de consommer de la musique, s'est largement modifiée au cours des années. Nous en tant qu'industrie, producteur de contenu de ce genre de service-là, les premiers fournisseurs de ce contenu-là, nous avons à relever des défits en terme de dématérialisation de la musique et à établir des systèmes, des nouveaux systèmes de consommation de la musique enfin qui auront, on espère, un jour une espèce de retour économique dans notre secteur.

5973 Et ce qu'on est en train de faire, c'est d'offrir une autre façon de consommer de la musique qui, nous, malheureusement, malgré.. par exemple, dans le cas de CHUM Astral qui peut avoir certaines vertus, mais on pense qu'ils peuvent encore favoriser la consommation sous forme de piratage ou d'appropriation ou qu'il n'y aura pas un flot suffisant de retour dans notre industrie, on se dit, donnez-nous une chance.

5974 Laissez, étant donné qu'il n'y a pas d'urgence d'établir ce genre de service-là, bon, on dit qu'il y a un marché gris, mais je pense que ça n'a pas été démontré de façon très très éloquente, on vous dit, est-ce que c'est possible que vous nous laissiez implanter des systèmes qui vont nous permettre d'établir de nouveaux mécanismes de consommation de la musique avec un juste retour dans l'industrie de la musique avant de nous en mettre un autre comme ça dans le décor.

5975 COMMISSAIRE WYLIE: Merci, madame. Merci, monsieur le président.

5976 LE PRÉSIDENT: Merci, mesdames. Monsieur le secrétaire.

5977 THE SECRETARY: Thank you, Mr. Chairman. The next appearing intervention will be présented by Mr. Rob McArthur.

5978 Mr. McArthur, you have 10 minutes to make your presentation, when you are ready.

INTERVENTION

5979 MR. McARTHUR: Thank you very much.

5980 First of all, I would like to thank the CRTC for this opportunity to speak in support of the applications before you.

5981 Originally, my intervention was for Canadian Satellite Radio but, in listening to the other applications, I'm in support of all three. I just want to make that clear. I'm here, actually, for independent artists.

5982 I live in Ajax, Ontario, which is just 10 minutes east of Toronto. I have been involved in music in one way or another from a very early. I started DJaying when I was 12, mostly for my parents in their basement, but I did get some other jobs, playing in a band at 13. In high school, it might have been a bad mistake, but one of my high-school bands, you know some of them, they are now the Tragically Hip. I choose to father six children, but they will take care of me in my later years.

5983 COMMISSIONER LANGFORD: Rotsa ruck.

5984 MR. McARTHUR: Yes.

5985 THE CHAIRPERSON: Now you are Tragically Poor.

--- Laughter / Rires

5986 MR. McARTHUR: Yes.

5987 Although we probably wouldn't remember each other, we were 17 or 18 at the time--actually, I have been talking to them a bit.

5988 I was originally going to start a career in radio broadcasting, but then found out what DJs got paid and decided to go into information technology. I spent 20 years, actually, in information technology and this gives me a really unique position. I also know the music business in a lot of different avenues.

5989 I am a songwriter, a singer, a performer, along with my wife. I do help artists in getting their products out and heard, but I'm also up on technology, as well, what's out there, what's the good things, what's the band things about them. I have been a project manager and manager and director of information systems in the private, public and corporate sector.

5990 The last five years, before I got out of IT, I decided to start a company called Spectrum Entertainment Productions and, basically, not only providing entertainment, but it was a resource for entertainers, musicians and songwriters to help them get things going.

5991 I also entered the hospitality industry when I purchased a pub four years ago--ergo, more broke--which is very musically oriented, but all my kids work there.

5992 I still currently play, write and record and perform with my wife, but three to four years ago an interesting trend started to happen: a lot more artists and bands were coming to me. I found myself heavily involved in assisting these artists and bands in the aspirations of some sort of music career.

5993 Most of these artists and bands, initially, don't do it for the money. They do it because they want to be heard or they have a passion, although many wouldn't argue if they could make a living out of it.

5994 So what brings me here today, in this short speech, is I'm here to represent the independents. Traditionally, like I said before, they do enter it for a passion, in hopes to make some money, but most of them already have full-time jobs doing something else.

5995 They have several different ways of making an income. They can perform, they can write songs, they can sell CD products, T-shirts, whatever. There are many success stories in Canada and abroad that are household names, but there are many more thousands of independents out there that, while keeping a job, still have music you would all enjoy. Many are just as talented, gifted, put out products that are just as good as those that you can hear on the radio today, but they are not getting that chance and that exposure that they so desperately need.

5996 And the numbers are increasing because major labels--as the businesses, there's a shift--are releasing a lot of artists and there's a lot more independent artists.

5997 I was just talking to my cousin last night, who you probably know in this area, Tracy Prescott Brown from the Family Brown and Prescott Brown. I was asking and sort of getting her input of what she thought of sort of the music business right now.

5998 They haven't recorded or released for four or five years. In a very short sentence, she said, "It sucks". Right now, they are not doing anything. They are actually producing more music. They used to be a household name in Canada and Ottawa and they are not doing anything. And she's for these applications, as well. Anything that can help products get heard and people to hear their music, they are definitely for.

5999 But the market for independents is definitely a tough one, even for non-independents. CD sales are way down, venus are down. External forces, such as awareness of drinking and driving, which is a good thing, smoking by-laws, the rising costs of operating a bar or a venue, has reduced the amount of places you can entertain, thereby also reducing the amount of money they can make while entertaining.

6000 Songwriting royalties, pay for airplay, are basically one of the things that do stay constant, as far as writers of music, and a lot of musicians are becoming writers because that's one of the other ways that they can make money.

6001 But this is difficult for independents, as well. One very common problem of all independents that I have talked to or helped--and I do release to radio and track for them--is they cannot get airplay on conventional AM or FM radio.

6002 Many stations are centrally controlled by corporations and they base their play lists on reporting charts like Nielsen, BDS and many others. If you are not on those charts, you can't get played. But if you can't get played, you can't get on those charts. It's sort of like when you went for your first job: they wouldn't hire you without experience, but you can't get experience unless you are hired. There's a little bit of a paradox there.

6003 So some conventional radio stations I have talked to do have special shows or times just for independent, but usually the rotation is usually just very limited and very light. In most of the charts that I have seen, and I look at them weekly, the majority of the artists on these charts are from major labels and subsidiaries. Very few are independent.

6004 So although there is Canadian content rules and the MAPL requirements, the 12 twelve spots or so that they open up for independent, well, not even independent Canadian artists, are just not enough. The majority of those spots are taken up by the household names that we know today. We have heard them mentioned: Shania Twain, Paul Brandt, Terri Clark. I'm more in a country spin anyway, and they are already getting--they are coming up from the States, but the independents that are in Canada are not getting on there.

6005 There's thousands of independent Internet radio stations that play independent artists and bands. It's a small percentage, but the artists are just looking for exposure any way they can do it and they are turning to those, as well. But satellite radio is definitely a way that is being used. As has been mentioned, a lot of Canadian independent artists are sending their stuff down, a lot are getting played.

6006 The benefit is just exposure and an audience base, trying to get people to hear their music. Yes, they may sell some CDs, they might get some jobs, but they get known.

6007 But not only is it possible for them to get aired on the genre that they are, there are stations just for independents, and I think that's a wonderful thing, and any of the independents that I have talked to, and I assist, help and work with, on a weekly basis, a hundred to 200 independent artists.

6008 But the problem is this technology or medium, Canada has no input in it. It's all up to the Americans--and I have heard a lot of American-broadcast arguments the last couple means--but that means that the Canadian artists are not only competing against other Canadians for that resource, they are competing against the American ones, as well.

6009 There is no current government body that takes care of the satellite broadcasts that come from the States, as we couldn't, but if we were to let satellite radio come into Canada, we would have some say.

6010 And there are technological issues, there are copyright issues, there are copying issues. We have had that right from the first time a cassette tape was produce in the market. People would record FM frequencies and people wouldn't get their record sales or anything like that, but FM radio survived, the record survive and cassette tapes are still out there.

6011 But most of these artists, independent artists, they don't want to do it. I talk to bands that come into the bars or bands that I represent, and I have heard bands that are very, very good and "You should put a product out", they say, "Why bother? I won't get aired".

6012 A CD to an independent artist costs, just for the CD alone, anywhere from $10,000 to $30,000. Unless they are rich or have financial backing or a record label backing them, they can't do it. They would have to take a second mortgage, take loans from friends and relative, and they just don't want to. So eventually what happens is they give up, they just don't bother, or they move down to the States. I know several artists that have moved to Nashville in hopes that they can maybe pursue their career there.

6013 So allowing satellite radio in Canada has many benefits to the consumer and musical artists alike. Satellite radio will still benefit the major artists and performers that we have up here in Canada, that are back by major labels, but, more importantly, it will help the independents where they had no previous help or assistance or success.

6014 Satellite radio will be governed by Canada to ensure the artist's best interests are taken into accounts. Independents will get exposure in Canada and the United States simultaneously, and that has never been available to any artist at this point, as far as I know.

6015 Others will benefit, as well. I mean, if more independents are recording, if they see a reason to record and release their products, studios will get busier and musicians will get more jobs, studio musicians, songwriters will write more, graphic artists will get more covers, the lists go on. It's sort of a trickle-down theory.

6016 All in all, it's my opinion that satellite radio, in all three applications that are before you, will be a gigantic boost to Canadian independent artists, bands, songwriters and the music industry, in general.

6017 In closing, it's not a matter whether satellite radio is in Canada, it already is. I have known about it for two or three years because of truck drivers that come in. I have heard it. I know at least a dozen that have it. So it's already here and I think we should have some control over it, initially. Initially, it may not be exactly the way we want it, but at least we have a start.

6018 It was actually, as I said before, a truck driver that brought this to my attention, but, we, as a country, should ensure that satellite radio benefits the music industry to its fullest extent. We must promote, develop and showcase our musical resources in a medium that has very few limitations and multitude of benefits. We need satellite radio to help the suffering Canadian music industry, more specifically, the independents.

6019 Satellite radio is not only wanted, it is needed by all the artists I have talked to, independent artists that I have talked to over the last two months. And the time it's needed is now.

6020 I thank you, again, for your time and would be happy to try to answer any questions you may have.

6021 THE CHAIRPERSON: Thank you.

6022 Commissioner Langford.

6023 COMMISSIONER LANGFORD: Mr. Chair, I really just have one question.

6024 Your presentation is really clear. I'm sorry you went for the six kids instead of the Tragically Hip, but what can I say, we all made the same mistake up here.

6025 What I'm trying to figure out in my own mind is there seems to me a disconnect between folks like yourself, who are really on the front lines. We had some entertainers here yesterday, I don't know if you heard them.

6026 MR. McARTHUR: I was here with the Good Brothers, yes.

6027 COMMISSIONER LANGFORD: Excellent.

6028 People like yourself, people who are right there--Travis, in Hastings, who can't hear the radio, is trying to get his disk played--seemed to want all these stations, all three of them, as many as they could get, give us any opportunity, yet, some of the groups that either directly or in an indirect way represent you folks, Canadian Independent Record Production Association, SOCAN, are not speaking, maybe, exactly for you, but they are certainly speaking for disks, for writers, for lyricists, composers, don't want it. I'm having trouble with that disconnect. Can you help me with that?

6029 MR. McARTHUR: I can try. Actually, I'm thinking of a few organizations I will be sending out a scathing e-mail to.

6030 As a songwriter, I would want my song aired as many times as possible. The biggest thing seems to be, what I have heard in the last few days--and I have been here since Tuesday--is Canadian content. They are concerned about losing Canadian content.

6031 If you talk to myself, or any other independent artist, the current Canadian content is not good. What we have on conventional AM-FM radio is not enough, twelve spots on country stations across Canada, somewhere in that number. When you are tracking, you hear, "I love the song, love the artist, love the production, but I only have 12 spots. I have no room for you". It's not enough.

6032 So, I mean, to use that argument for satellite radio, I would use the same argument for the current radio system that's out there.

6033 COMMISSIONER LANGFORD: Explain that to me, if you can, 12 spots?

6034 MR. McARTHUR: You have a percentage that they have to for Cancon, and the last two artists that I released for and tracked, when you phone them, they have 12 spots for Cancon in their station, in their rotation. That would include Shania Twain, Paul Brandt, Terri Clark. If Shania happens to have two or three songs out, this type of thing, they only allocate so many spots.

6035 And the number one thing you hear from an artists is, taking away maybe they are not good enough, maybe it's not the format, you can take all that way, there's not room. If you happen to be an independent artist that releases around the time of these major artists, you have wasted your time and your money.

6036 So they are more concerned about, I guess, the Canadian content. And, yes, I'm very concerned about that, too. They are looking at it from a broad scope, but they are not the person down there that has to work in a kitchen to pay your bills while you are trying to make a living out of music.

6037 And I think you are right, there is a disconnection. I was very disappointed to hear some of the comments I have heard by the organizations, as someone who is a member of some of them.

6038 COMMISSIONER LANGFORD: And the notion of only 12 spots and these spots being taken, how many Canadian artist--I mean, on an average radio station that you listen to, how many actual Canadian artists might be played over a period of a week or a period of a month?

6039 MR. McARTHUR: Well, I guess, and I will deal strictly with country because that's sort of what I have been into the most, they have mentioned all the names. Can you name...? I could probably name six, seven or eight artists. But keep in mind that artist may have two or three songs out--

6040 COMMISSIONER LANGFORD: Yes.

6041 MR. McARTHUR:  --and those are the spots for rotation. But there's thousands. And I believe there will be some other people that deal with much more people than I do. I'm really just an independent. I'm by myself, even with what I do.

6042 But there's thousands of independent artists out there. I have at home approximately 140 CDs, country Canadian CDs from Canadian country independent artists, from the east coast to the west coast, that you will never hear. They might be aired a little bit on the east coast, but you will never hear Newfie music in British Columbia, or Celtic, sometimes.

6043 So the 12 spots are the major artists that are promoted and have financial backing and things like that. It's because it's put in the face of the music directors, the program directors.

6044 There is no other way. You can send you kid out, you can phone every day, and some are very sympathetic, but they just don't have the room.

6045 Like I said, I understand the Canadian content, their argument on satellite, but, as I have said before, I think there is an existing problem with what there is now.

6046 COMMISSIONER LANGFORD: So the radio stations are letting your down, as individuals.

6047 What about in a format sense? Are the formats, are there too few of them to give an opportunity to the sort of experimental artists out there? We have heard that in some of the submissions.

6048 MR. McARTHUR: Actually, one of your -- your community and college person that was here. They are wonderful. From an independent artist, they will play. And they are right, they should be supported. They are the first line.

6049 If I'm a teacher at a school and I hear this artist that I liked in community radio, I might phone my major station and say, "Hey, why aren't you playing this guy?"

6050 That's true, there are so many. There's bluegrass, there's alternative country, there is Celtic music, or east coast music, in the east coast. They have to, obviously, tailor it to what their population or demographics is, but it would be nice to be experimental.

6051 One of my first jobs, when I was in Kingston, I did a bluegrass hour as part of the radio station at Queens University. I wasn't even a member of Queens University. I just said, "Hey, I know bluegrass, I have been doing it, I would like to do a show", and I did. So the community radios are answering that.

6052 The satellite radio is answering that by having so many different genre, as well as the independent. And I understand for conventional radio, because maybe it's not--maybe people don't want to buy advertising for bluegrass. It's market, I understand that. But if it's a subscription base and people are listening to it, then it's worth their while.

6053 I don't think there is enough, but I can understand that because, obviously, at the end of the day, it's the shareholders that wants their return on investment.

6054 COMMISSIONER LANGFORD: So it may be excusable, but the fact is there is still a huge impact on folks like yourself?

6055 MR. McARTHUR: Yes.

6056 COMMISSIONER LANGFORD: Thanks very much.

6057 Those are my questions, Mr. Chairman.

6058 THE CHAIRPERSON: Madam Wylie.

6059 COMMISSIONER WYLIE: One of the things that fascinates me is--you intervene in support of CSR, right--

6060 MR. McARTHUR: Yes.

6061 COMMISSIONER WYLIE:  --of the XM service? And your specialty is country.

6062 MR. McARTHUR: I play country, but represent rock, jazz, blues.

6063 COMMISSIONER WYLIE: Okay. Well, even better.

6064 We heard Mr. Tompkins. He's definitely country.

6065 MR. McARTHUR: Definitely.

6066 COMMISSIONER WYLIE: There will be one musical Canadian service on CSR. How is it that it's going to give exposure to Canadian artists in all these genres on one channel, in English, one channel? The other, if I recollect after all these four days of work, is Laugh Canada. So I guess it's, in part, at least a talk, but it's a comedy channel. How does that work that that will give all of you artists a better deal in Canada?

6067 MR. McARTHUR: I think that's more into programming, if I know, for instance, on a Friday night at eight o'clock for three or four hours on satellite radio, the independent, they will be airing country, on-air country. Your community stations do it a lot. They do shows by--you can mix light rock and country and adult contemporary. I wouldn't want a hip-hop song.

6068 COMMISSIONER WYLIE: No, the answer would is that that block of three hours----

6069 MR. McARTHUR: Yes, or four.

6070 COMMISSIONER WYLIE:  --on that one channel is worth taking in 99 American channels?

6071 MR. McARTHUR: Well, that one block is just one day. That could get aired 10 times a week.

But, yes, it is, because right now there is none.

6072 COMMISSIONER WYLIE: Okay, good enough. Thank you.

6073 THE CHAIRPERSON: Thank you very much.

6074 MR. McARTHUR: Thank you.

6075 THE CHAIRPERSON: Mr. Secretary.

6076 THE SECRETARY: Thank you, Mr. Chairman.

6077 The next appearing intervention will be presented by Patricia Silver.

INTERVENTION

6078 MS SILVER: To the members of the Commission, good afternoon.

6079 Thank you for the opportunity to speak to you today on behalf of satellite radio.

6080 My name is Patricia Silver, from Toronto. Children's entertainment has been my passion and my profession for 30 years. I began as a professional children's entertainer in 1974, quickly developing the Sphere Clown Band, which won accolades through a Juno nomination and a gold record. I created the Sphere Entertainment Booking Agency in 1980 and we are now a leader in the family entertainment production and booking field in Canada and internationally.

6081 We produce the live theatricals of many children's TV shows, including the Gemini Award-winning the Toy Castle, and our beloved Polkaroo. We represent more than 900 family and children's performers for bookings at fairs, festivals, theatres, municipal events, special events models and more.

6082 I serve as the international representative on the board of the Children's Entertainment Association, which encompasses all aspect of kids' entertainment, from retailers to songwriters, from lawyers to record companies, with members in Canada, the U.S., the U.K. and Australia.

6083 I'm a founding member of the Kids' Division of CIRPA. I created the Annual National Kids' Day events in 20 concurrent locations across Canada. I hold credentials as a radio producer, radio on-air personality, children's record producer, children's performer, musician, I play nine instruments, award-winning children's songwriter, best-selling children's book author, booking agent and I'm a mom. I'm a member of SOCAN, the AF of M, CIRPA and the Songwriters' Association of Canada.

6084 It is time for radio in Canada to present the wealth of Canadian children's talent. Canadians are the world leaders in the creation of children's music and children's books. The rest of the planet realizes that Raffi is the Beatles of children's music and Franklin the Turtle rules the preschool book world. Now, it's time to tell Canada.

6085 There is currently no Canadian children's commercial radio channel, unlike in the U.S., where there have been many children's channels. Among the highlights of the more than 100 proposed XM channels are the two dedicated children's channels, including the award-winning XM Kids.

6086 Interestingly enough, even though Canadians are pioneers and leaders in the creation of children's music, the format of our home-grown music is absent from our Canadian radio dials. Not so on XM Kids Channel, where Canadians are front and centre. XM Kids exposes Canadians children's talent, such as Raffi, Fred Penner, Sharon, Lois and Bram, Paul Hahn, Charlotte Diamond, Eric Nagler, Rick and Judy, Sara Jordan, Jack Grunsky, J.P. Harrison, Razzmatazz and Nancy White, just to name a few.

6087 Radio has supported the development of new artists, as well as served as a key marketing tool for the materials of existing children's performers. Twenty years ago we had a vibrant record distribution network for children's music in Canada. This has eroded to the point where there is almost no distribution for our CDs.

6088 Parents can now go to chain stores and buy Disney, Barney, Sesame Street and Bob the Builder. Why aren't they asking for Kim and Jerry Brodey or Sharon, Lois and Bram or Sandra Beech or Judy and David or Cindy Cook from Poka Dot Door or Markus or My Sphere Clown Band? Because there is no national avenue to promote these artists.

6089 We all know the power and the value of the public airing of music. I can only hope that more airplay will spawn greater sales of Canadian children's musician this currently depressed market. A children's radio network would give much needed exposure to our excellent talent, which could, in turn, see measurable results in CD sales and concert bookings.

6090 How can a children's artist establish a national reputation? There is limited TV opportunities, so we rely on touring. But unless you live on the road, it is unlikely that you, as a kids' performer, will be known in every corner of Canada. There are very few venues in smaller centres that can afford to bring in a kids' touring artist. So the performers tend to be limited to shows in major cities. Satellite radio can bring our kids' artists into Canadian homes commercial-free from coast to coast to coast. It can help artists establish a truly national reputation.

6091 As Canadian children's recording artists develop their craft, they export their talent and the product overseas. We are recognized internationally for the high quality of our children's performers. Vancouver singer Rick Scott is a big star in Japan. My own group, Sphere Clown Band, has done several successful tours in Singapore and China, where our music and craft are revered by children and educators alike.

6092 Giving kids' musicians radio exposure supports career development, which can lead to opportunities abroad, creating more trade for Canada. It's not only good for culture, it's good for business.

6093 The only royalty we receive as children's songwriters is from the live performance venues. A radio channel will create an additional revenue stream through broadcast royalties via SOCAN.

6094 And what are the messages that Canadian children's performers are giving kids through their music? Be creative, don't bully, share, stay healthy through fitness. Studies show that music at an early age helps children with learning skills, especially math. Radio can stir the imagination with stories and images.

6095 One of my all-time favour radio pieces was produced by comedian Stan Freberg. It was a promotional spot that he recorded to emphasize the power of radio. As Stan narrates, sound-effects are used to convince us that Lake Michigan is being drained, then filled with whipped cream and topped with a gigantic cherry. Try doing that on television.

6096 Canada has some of the best children's novelists in the world. The engrossing stories told in the rich language of fine literature will captivate and stir our children, as well as encourage them to read. XM radio can thereby support the emphasis on literacy in the school system through this children's network.

6097 I applaud the efforts of XM to enrich the lives of Canadian children through the wonderful imaginative world of radio.

6098 Thank you.

6099 THE CHAIRPERSON: Thank you, Ms Silver.

6100 Commissioner Pennefather.

6101 COMMISSIONER PENNEFATHER: Thank you, Ms Silver, for being here.

6102 I guess from what you are saying, like the previous intervenor, in terms of the proposal here, where we have two Canadian English and two Canadian French channels, I see you are supporting CSR here. In a mix of considerably more American or non-Canadian channels, more is better. Is that basically why you are comfortable with this proposal?

6103 MS SILVER: Right. Well, they have a children's segment in there and we need airplay and they are offering it and it's fantastic. We have nothing at the moment.

6104 COMMISSIONER PENNEFATHER: Again, as well, you find that children will seek out that specific channel amidst all the different music that's available?

6105 MS SILVER: I think they will. I think parents will. I was a big fan of Radio AAHS in the States. It's A-A-H-S. Radio AAHS. It was a wonderful network. It went under, unfortunately. But they did have a big listener base. It was commercial radio. They would run the equivalent of our soap operas. We were as Carmen San Diego for children. It was very engrossing and every day you would tune in at a certain time.

6106 People listen in their cars. I mean, that's a big place where children listen to children's music is in cars. And they would listen at home. Lots of parents don't want their kids watching commercial television. If there's radio for them to listen to, they will direct them that way.

6107 COMMISSIONER PENNEFATHER: I guess that we my next question. The focus is on car use, and up until this point you have to be a certain age before you drive a car. So I guess it's like that commercial that says, the more entertainment in the car, the quieter the trip for the parents?

6108 MS SILVER: Absolutely. I have a child. This is what we do. My son's now 19. When he was little, I never listened to my music in the car, ever, because he would insist on listening to his favourite songs. And we knew if we pandered to that, we had a quiet ride.

6109 COMMISSIONER PENNEFATHER: Thank you very much for being here.

6110 MS SILVER: Thank you.

6111 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

6112 THE CHAIRPERSON: Thank you.

6113 Mr. Secretary.

6114 THE SECRETARY: Thank you, Mr. Chairman.

6115 The next appearing interventions will be presented by Forerunner Global Media Incorporated, Mr. Paul Weigel.

INTERVENTION

6116 MR. WEIGEL: Good afternoon, Mr. Chairman and members of the Commission.

6117 Thank you for this opportunity to address you on this very important matter.

6118 My name is Paul Weigel. Forerunner Global Media is dedicated to serving the great Christian community by working to establish a national faith-based radio network. We have been approved for two specialty audio services, which we may launch next year. Our objective is to be a catalyst for interaction and cooperation between the many faith groups across our country.

6119 Our programming is inclusive and attempts to reach Christians from a broad range of denominational backgrounds. We feature the many genres of gospel music and our spoken word programs cover international and regional news and information of interest to a broad spectrum of the Christian community.

6120 The Forerunner Arts and Media Program has a national perspective on the arts within our community. CSR has recognized this program as a part of Canada's rich cultural diversity and the faith community as a large niche audience.

6121 Gospel music is one of the fastest growing genres in Canada and the U.S. It's growth in Canada primarily is due to the increased exposure it is getting on the 30 or more dedicated radio stations which the Commission has licensed over the past 10 years.

6122 Because of this initiative, Canada has produced a number of internationally renown gospel music artists, such as Brian Doerksen, Andy Park, David Ruis, to name only a few. They, and others, have their music played, literally, around the world; however, they are little known here in Canada. I doubt if any more than a few people in this room who are broadcasters would recognize their names.

6123 This lack of recognition is directly and proportionately linked to the relative few venues of broadcast for gospel music throughout Canada. Canadian contemporary Christian music pioneers such as Steve Bell, Lianna Klassen, John Buller, Critical Mass and others have invested 20 years or more in developing their audience and the gospel music industry here in Canada, mostly without the aid of any medium that play their music.

6124 Consequently, they only have a regional audience. Contrastingly, artists from the U.S. with one-tenth the investment of time are better known here than the artists who are Canadian because of the U.S. media spillover.

6125 These are the problems that we face with faith-based broadcasters. We believe that the solution to these problems are the establishment of national programming that can reach the entire country. As you may be aware, there is no simple or viable way to do that except through the proposed satellite radio platform.

6126 CSR's programming approach has been very inclusive and offers new stakeholders like ourselves and others access to mainstream broadcasting and provides diversity to the voices heard in Canada. We believe that the U.S. spillover exposure that Canadian gospel music artists will receive as part of the CSR's proposal will have a significant impact on talent and the industry.

6127 Canada is already becoming known by Nashville gospel music labels as a hotbed for new talent and the exposure on XM of Canadian gospel music artists can be not over stated. We believe that this will greatly accelerate the discover of Canadian talent.

6128 In the past 10 years, the 30 dedicated stations that have been established have spawned a whole group of support industries like artist management, radio program syndicators, more concert promoters, talent searches, and a ground swell of new artists from coast to coast. So what has been done is really working.

6129 The Canadian Talent Development dollars that CSR will be directing to gospel music is the first specific fund that assist artists in this genre. We believe that the licensing of CSR will also add significantly to the development of the gospel music industry and help us take it to the next step.

6130 There remains some challenging hurdles for faith-based broadcasters. The primary one the availability of platforms through which national programming can reach are largely under served audience in rural areas and in their cars. We look to the Commission to help us serve gospel music artists and the faith community by recognizing us as an integral part of the broadcasting community and a part of the mainstream mix of broadcasting in Canada.

6131 To give you an idea of the size of the audience we serve, in June 2003 Ipsos-Reid poll indicated that 66 per cent of Canadians identified themselves as Christian, and a May 2003 Ipsos-Reid poll indicated that 63 per cent of regular church service attenders said that the media was doing a poor job in its coverage of faith and religion.

6132 As faith-based broadcasters offering national programming, we anticipate being able to help build the audience for satellite radio by reaching out to our sizeable constituency and promoting it as the only way to get our programming when mobile.

6133 We applaud the CSR's programming diversity and appreciate their recognition that faith-based programming has a place in the cultural development of Canadian broadcasting. By telling our stories we define our truly Canadian identity. By offering us a voice we know our story and identity matters to Canadians.

6134 Thank you, John and Bob, for your fresh vision, inclusion of us and others who represent the cultural diverse fabric of Canada in your lateral programming of CSR.

6135 Satellite radio could easily be the most important development in radio since its inception. It has proven to be the technology of choice by millions of consumers in the U.S. It offers a host of attractive features, including niche audience programming, which will help it gain a significant market share.

6136 As regulators and effectively the protectors of the broadcast system, we encourage you to see this brilliant new technology as more than just a delivery system for the status quo. As others have said, satellite radio's success will ultimately come down to its content. If the Commission wants true diversity, you must have a diverse group of programmers vested with a seat at the satellite radio table.

6137 The Commission must evaluate the applicant's commitment to provide access and adversity to the broadcast system, especially since over-the-air frequencies in most metropolitan areas have been exhausted.

6138 Commercial radio has 95 per cent of the radio bandwidth and accessibility to the broadcast system is a real issue. Satellite radio can be shaped to be inclusive, accessible and represent our culture and ethnic and religious background, and CSR's application represents that model and we encourage the Commission to consider how the other applicants should provide access and other forms of programming on the satellite radio system.

6139 Canadians can maximize the benefits of the system by acting now. We must not be threatened by it, rather embrace the change it will bring, while shaping it to achieve our objectives. This technology has the potential to vault Canadian talent and culture into the world stage, and how the Commission responds to the challenges it faces will determine to what extent Canadians will benefit from satellite radio.

6140 We encourage the Commission to consider the submissions and act quickly to capitalize on this leading edge technology to the benefit of all Canadians.

6141 Thank you.

6142 THE CHAIRPERSON: Thank you. Thank you very much. Your presentation was clear and we don't have any questions for you.

6143 MR. WEIGEL: Thank you.

6144 THE CHAIRPERSON: Mr. Secretary.

6145 THE SECRETARY: Thank you, Mr. Chairman.

--- Pause

INTERVENTION

6146 MR. TERRENCE: Good afternoon. Thank you for having me, Mr. Chair monsieur le président, Madam Vice-Chair, Madame la vice-président. Je vous remercie pour m'avoir invité pour discuter les points de vu des artistes canadiens indépendants.

6147 I would like to continue in English if I may. Thank you for having me this afternoon.

6148 I would like to first, in my 10 minutes, introduce myself; introduce to you Indie Pool, if you haven't heard of Indie Pool; give you some examples of what we do; who are Canadian independent recording artists and why they overwhelmingly support Canadian Satellite Radio and satellite radio in general.

6149 I am from Ottawa originally, brought up in Orleans, went to Garneau High School, played in bands at a very young age, have been in the music industry ever since I was 15. I worked with artists, producing them, mixing them, songwriting, played some songs in movies. I moved out to Vancouver, lived a bohemian lifestyle, wrote some songs, was on welfare for awhile, and was --

6150 THE CHAIRPERSON: At that point I was going to say it sounds like Paul Anka.

--- Laughter /Rires

6151 MR. TERRENCE: Yes, I could do a bit.

6152 THE CHAIRPERSON: Except for the welfare part.

6153 MR. TERRENCE: Right.

6154 Then I have always been in the music industry producing and writing with artists, and then when I was 25 -- eight years ago -- I started Indie Pool. Indie Pool is dedicated to pooling the resources of independent recording artists. So basically we try to use strength in numbers to negotiate access and better pricing for Canadian independent recording artists.

6155 To give you some examples, HMV doesn't want to deal with independent recording artists directly because I guess it is difficult for corporations to deal with artists, so they must go through Indie Pool in order to put their CDs on the shelves if they are not signed. So we are an aggregator for them. Puretrax called us nine months ago and said, "We are having too many independent artists come to us, could you aggregate the content for us so that we can have independent Canadian artists on our website? We do that for them.

6156 We do the same for ITunes and Napster, Chapters, Indigo. Cinram, the big CD manufacturer, they don't want to deal with independent artists directly either. They use Indie Pool.

6157 Indie Pool represents 18,000 Canadian independent recording artists. We distribute over 6,500 Canadian independent titles, CDs.

6158 We work for these artists in every way that we can. Whatever business they are in, we are in. So what happens is, we go to a T-shirt company and we say we have 18,000 bands, what is our T-shirt price? We fight them and we bust them down and we get a great T-shirt price and we pass it on to the bands.

6159 We do the same wit postcards and T-shirts and all areas of the music industry, directories, bar codes, e-commerce, domain names, website hosting. We do things cheaper and better because we have strength in numbers. We have no real competition in Canada. We are the main aggregator.

6160 To answer something you asked earlier, sir, why is there a disconnect between the CIRPAs and the CRIAs of the world and the independent recording artists, and that is because those organizations don't represent Canadian independent recording artists.

6161 CRIA represents the majors. CIRPA represents the industry. If you go to the CIRPA website, there is no artist search in their member list. There are accountants, there are lawyers, there are publishers, there are video directors and video producers, and so on, but there is no search for artists because artists are not necessarily members of CIRPA. They represent Tier 2.

6162 In my view, the industry can be seen in three tiers:

6163 Tier 1, which is major label artists, the ones that everybody knows.

6164 Tier 2 is major Indie.

6165 Tier 3 is the other 95 per cent of the music industry, which is what I represent. That is the 24,000 artists in Canada that are independent. I only represent 18,000 of them, but there are 24,000 to our research. We are working on the other 6,000.

6166 So Indie Pool acts as an aggregator pooling the resources of independent recording artists. The clients that I work with the, the artists that I work with, overwhelmingly support Canadian Satellite Radio, for one, because of the Canadian talent dollars that they are investing in Tier 3 and not just Tier 2 and Tier 1. And they already have plenty of money and plenty of airplay.

6167 But they support the satellite in general because they are getting more satellite play as is today with the rules that you are going to be placing on them, which answers the question, Madam Wylie, that you had earlier, which was: Is one channel going to do it? If all you artists are saying you have all these genres, you have AC, New Age, Blues, Children's, Christmas, Classical, Comedy, Country, Dance, Electronic, Funk, Gospel, Hip-hop, Rap, and so on, and so on -- these are all genres that we represent -- how can one channel do it?

6168 To me, it is not about the channel. To me it is about the even existing XM is playing hundred and hundreds of more of my clients than terrestrial Canadian radio currently is. So even with the current conditions they are getting way more radio play.

6169 So does this one Canadian channel really fix everything? I don't think so. That is why I think you are asking that question.

6170 I think it is more a question that if there is a folk channel with no commercials, then there is a lot of content to fill so my folk bands are getting in. Same thing when it comes to classical, same thing when it comes to all the other sub-genres that are very difficult to find any placement for in traditional radio because of commercial demands.

6171 I have a petition. I reached out to our e-mail list and asked them what they thought. We had about 3,000 artists sign the petition, Canadian independent recording artists, many with comments, so I hope you have received it. I believe you have received it.

6172 THE CHAIRPERSON: I am very careful in answering that kind of a question.

--- Laughter / Rires

6173 MR. TERRENCE: If you haven't, we will make sure that you do.

6174 I have never had 3,000 artists in Canada agree to anything. Someone told me at some point that it was kind of like herding cats. That is kind of what my job is. We have a wide diversity of clients, all ages, all genres, all styles. We have lots of mohawks coming into our office, we have Christian contemporary artists coming into our office, we have 50-year-old country artists coming into our office, it crosses all the areas.

6175 They all -- well, not all, but I have received next to zero negative comment and that is rare, because our artists love to be vocal and they love to be militant and they love to be rebellious, and they can't find anything bad to say because Cancon does zero for Tier 3. Cancon reinforces Nickelback so that CRIA is happy about because instead of getting six spins they are getting 20 spins. Of course they are happy about it, and who can blame them. I'm not criticizing them for it either.

6176 The same for Tier 2, the major Indies of the world. They are getting more play and they are sneaking into Cancon a little bit, but Tier 3, artist development, the true minor leagues, the future of Canadian music, which is an exploding scene right now with amazing talent, no one is signing anybody, no one is getting played.

6177 So when you say we are going to unplug this drain and there are going to be hundreds of these channels that already your fellow artists are getting played on because there is so much more access, because there is so much more choice, then everybody is for it.

6178 I can speak for them from the bottom of my heart and in all honesty and with the petition and with hundreds and hundreds of e-mails and comments. If you want to just check some out, they are quite thorough.

6179 That is pretty much all I have to say. I don't know a lot about the technologies and I don't know a lot about the major or the major Indies, I just know a lot -- everything there is to know about independent unsigned artists and they want this to happen, because they can't go anywhere but up. They are in the basement, they are getting zero radio play, and anything that happens, it can't be worse. That is as simple as the argument can get for them.

6180 Thank you.

6181 THE CHAIRPERSON: Thank you, Mr. Terrence.

6182 Did you say earlier that a number of your artists, what you refer to as Tier 3, are currently carrying on XM?

6183 MR. TERRENCE: Many. I even heard someone previous mention Charlotte Diamond and I heard someone else mention Critical Mass. I'm hearing these names pop up all the time. I have seen the list. Hundreds.

6184 THE CHAIRPERSON: Hundreds of your 18,000 --

6185 MR. TERRENCE: Yes.

6186 THE CHAIRPERSON:  -- are carried currently on XM?

6187 MR. TERRENCE: Yes. The list is available.

6188 THE CHAIRPERSON: Of those, how many would be carried on Canadian radio currently?

6189 MR. TERRENCE: If you don't count local college radio, I would say probably five, at the most, very most.

6190 THE CHAIRPERSON: Commercial radio.

6191 MR. TERRENCE: At the most. I don't even know who those five would be. I'm just saying it so I'm not dishonest.

6192 THE CHAIRPERSON: Thank you, then. That was my question. Thank you very kindly. It was informative.

6193 MR. TERRENCE: Thank you.

6194 THE CHAIRPERSON: Mr. Secretary?

6195 THE SECRETARY: Thank you, Mr. Chairman.

6196 The next appearing intervention will be presented by Monsieur Daniel Lanois.

--- Pause

6197 THE SECRETARY: Not seeing anybody getting up, Mr. Chairman, I will now call the next appearing intervenor --

6198 THE CHAIRPERSON: I'm sorry, which did you just call, Mr. Secretary?

6199 THE SECRETARY: Daniel Lanois.

6200 THE CHAIRPERSON: Okay.

6201 THE SECRETARY: Numbers 20 and 26 have swapped, so we will now hear "Just For Laughs", Mr. Bruce Hills.

--- Pause

6202 THE CHAIRPERSON: If you could just push that button there.

INTERVENTION

6203 MR. HILLS: Hi. My name is Bruce Hills. I run the Montreal "Just For Laughs" comedy festival. I am the COO. Unfortunately, I am not very funny, although I'm sure you could do with a couple of jokes.

6204 In my 19 years with the company I have played a role in building the festival into the world's biggest and most prestigious all-comedy event. I oversee all our festival shows, all our live touring events, even the one that comes here to the NAC, and all our TV shows.

6205 "Just For Laughs" prides itself on its mandate to prominently feature Canadian comedy talent alongside the world's best. The festival offers talent invaluable exposure to the comedy heavyweights made up of an impressive list of television network and studio executives from Canada, the U.S. and, of course, internationally who attend the festival each summer.

6206 Many Canadians who have gone to success in the comedy business, both in Hollywood and internationally, credit "Just For Laughs" as being an important milestone and launching pad for their careers. "Just For Laughs" fully supports the CSR license application and we feel it offers Canadian comedy talent a unique and unprecedented exposure to the Canadian and U.S. markets.

6207 In addition, it offers Canadian talent an invaluable creative outlet that currently is not available. "Just For Laughs" is a big believer in what Canadian Satellite Radio can achieve.

6208 A Canadian comedy channel is essential to the comedy industry in this country for a variety of reasons.

6209 Firstly, there are three U.S. satellite comedy radio stations, none of which have substantial Canadian content.

6210 The Canadian television industry doesn't do enough to support our incredibly deep comedy talent pool. Even with the excellent job the CBC and the Comedy Network does, they can only afford to scratch the surface. Television is very expensive, radio production is not. Canadian Satellite Radio offers an economic way for Canadian comedic talent to develop shows and formats without the pressure and expense of television.

6211 CSR's commitment to produce a large number of Canadian original production has the potential to play a crucial role in the development of the Canadian comedy industry. It is important to note that this is the model that BBC radio in the UK has used, where radio is a platform for comedic talent to develop and showcase their ideas at a crucial stage in the career development.

6212 Presently, not many Canadian-made television comedies make it into the U.S. market, mainly due to the fact that it is a very competitive market, because they don't have the contacts, and they definitely don't have the distribution. There are some exceptions, but overall this is the case.

6213 CSR will be a great launching pad for Canadian talent in the North American market and Canadian satellite radio can play an important role in maintaining Canada's role as the biggest supplier of comedy talent in the world, maybe even launch the next Jim Carrey or Mike Myers.

6214 "Just For Laughs" looks forward to the excellent benefits to be provided by Canadian Satellite Radio, such as through a variety of shows produced by "Just For Laughs", of course featuring a great deal of Canadian talent. CSR will offer them impressive and invaluable exposure -- and us for that matter.

6215 It will help "Just For Laughs" promote the festival. We find it will be an invaluable means to promote our festival. Within Canada we will be able to expand the already existing audience to the U.S. to help us build a brand new audience. We haven't been on TV since 1995 in the United States so this will be an excellent way for us to draw more tourism to Montreal and, most importantly, we feel continue to help build exposure for Canadian talent.

6216 It will also help "Just For Laughs" promote "Just For Laughs" touring shows which take Canadian talent across Canada and to the U.S.A. Most of this Canadian talent would not likely otherwise perform in the U.S.A., making such exposure invaluable to their career development.

6217 "Just For Laughs" would be proud to be involved with Canadian Satellite Radio. We feel that the potential benefits are great, both for the comedy fan listening and the Canadian comedy talent who would be using Canadian Satellite Radio to showcase their comedy skills.

6218 Thank you very much.

6219 THE CHAIRPERSON: Thank you. Good. You were very clear. No questions. Thank you.

6220 MR. HILLS: Thank you.

6221 THE CHAIRPERSON: Mr. Secretary.

6222 THE SECRETARY: Thank you, Mr. Chairman.

6223 The next appearing intervention will be presented by Mr. David Bray.

--- Pause

6224 THE SECRETARY: Your microphone, Mr. Bray. Thank you.

INTERVENTION

6225 MR. BRAY: I'm sorry about that. I am going to refer to my notes, if I may.

6226 First of all, I just want to sincerely thank you for the opportunity to address the committee on the matters that are so vital that are before us.

6227 I can't claim to be a wealthy man, in fact all you will find in common between Bill Gates bank account and mine are the zeros, but over the past two decades I have had a wealth of experiences working in and around radio which I will certainly always treasure.

6228 I spent 10 years crossing the country analysing radio in all of the major markets. I have performed and continue to perform a series of concurrent functions. These include my work as a radio analyst consultant, media buyer and planner, the creative director responsible for numerous ad campaigns, a journalist, a columnist in Broadcaster and a variety of other publications, a producer of radio programming and a researcher. I served as Chair of the Digital Radio Programming Committee for Canada and I worked on the only national survey done to date on consumer preferences for digital radios. I also currently serve as Vice-Chair of the BBM Radio Executive and Chair of the BBM Survey Measurement Committee responsible for development audience measurement practices in Canada.

6229 Following that, the first point I would like to address is the potential impact of subscription radio on traditional radio.

6230 The radio industry is currently very healthy, both from a financial perspective, with 2003 ad revenues of $1.2 billion, which is up 8.4 year-over-year; in terms of audience tuning, with a 94.8 per cent national weekly reach and 21.8 hours tuned weekly per capita for adults 18-plus, as reported by BBM.

6231 Still, some signs are less than encouraging. Hours tuned for teens have declined by nearly 30 per cent over the last four years. Since less than 1 per cent of ad buys are directed toward teens, there is little incentive to cater to this group in terms of programming.

6232 This also holds true for a variety of other demographics and audience segments who find themselves disenfranchised when it comes to finding their preferred formats, not that the radio industry should be making any apologies.

6233 Traditional stations are funded by ad revenue which demands that they strive to have broad-based appeal, garnering as many adults 25 to 54 as possible. This dictates familiar music without the risk of exposing new music or niche formats, hence the number of adult contemporary stations with a somewhat conservative music mix.

6234 The truth is that broadcasters are doing a very thorough and professional job. Still, this underlines the cultural need for complementary services committed to exposing new music and a tapestry of vital niche formats that cry out to be heard.

6235 Since they new stations will be driven by subscription revenue, the need to be all things to all people vanishes. Instead, the stations can strive to exist on their own terms, offering listeners something truly unique.

6236 As well, we can finally reach people in all areas of our country, including listeners that have had far too little choice for far too long.

6237 Finally, all Canadians will be brought together on the same playing field.

6238 Having done a substantial amount of research, I believe that as opposed to cannibalizing existing hours tuned, these complementary services will repatriate listeners to radio and generate an excitement missing for generations. Traditional stations will ultimately benefit.

6239 Satellite and subscription radio, with its wide diversity of formats, will make an essential cultural contribution to radio listeners across Canada. Niche formats normally lost in the melting pot of traditional radio will finally be given the voice that they deserve.

6240 Moreover, numerous Canadian artists who wouldn't normally receive much airplay on conventional stations will be afforded the opportunity to have their music heard by a much wider audience, both in Canada and in the sizeable U.S. market.

6241 I can't overstate the importance of that opportunity. This in turn affords our artists increased touring opportunities and CD/download sales. Listeners benefit by having access to cutting edge formats and exposure to artists that they might not otherwise hear -- all this without giving up traditional radio stations which continue to do a good job.

6242 It is the best of both worlds. It seems clear that this is the next step in the evolution of radio, one that is critical to the artistic and financial success of Canadian performers and writers.

6243 Canada has undeniably produced some of the world's great singers and songwriters. The quality of artists that this country has produced is disproportionate to our size and we are fortunate to have a couple of Canada's best with us today and you will be hearing from them shortly, but people for whom I have immense respect.

6244 Radio has, for the most part, served them quite well in the past, but the nature of the record industry continues to change dramatically. Very few new artists are being signed by major labels. At the same time, the formatic reality of most mainstream nations has made it more difficult to break new music.

6245 Cancon on these stations, while meeting regulatory requirements, does very little to assist new or niche artists. Innumerable formats are left without voices. The primary result is having the likes of Céline Dion or Avril Lavigne move into higher rotation. That is not to slight those artists at all, but simply that is where the benefit tends to go. It also benefits gold artists like the Guess Who.

6246 Still, in their current incarnation, the Cancon regulations do little to assist up-and-coming artists needing a break. That is, after all, one of the primary reasons for the regulation's existence in the first place I would presume, although that of course is your call, not mine and I respect that intensely.

6247 The answer would seem to be clear: The satellite and subscription applications have generated enthusiasm, excitement and ground-breaking opportunities unlike anything we have seen in decades. Their goal is not to supplant mainstream radio, but to supply a cultural alternative which doesn't have to rely on the dictates of advertisers.

6248 The enthusiasm of the Canadian artists with whom I work, and continue to work, is infectious. Many major talents are looking at radio with renewed vigour and hope. The first all-Cancon special from Canadian satellite radio aired across the U.S. on November 1st and the commitment by the U.S.-based satellite stations to a minimum number of Canadian ads is truly ground-breaking, from an artist's perspective.

6249 This would be in addition to all the Cancon stations which the various satellite applicants are proposing. And I think it's important to look at both aspects, the fact that they are going to be all Cancon stations and then a significant commitment to Cancon on the American stations.

6250 As a complement to all of this, I have seen a new retail sales opportunity, which, relying on satellite distribution of music files will place user-friendly digital distribution kiosks with a huge number of albums, in the thousands, in easily accessible stores, such as grocery stores, across Canada.

6251 This firm is committed to working with satellite radio in order to end subscription radio in order to ensure that niche artists have new, never-before-available sales opportunities right across the country. This finally closes the sales loop and the promotional loop for our artists.

6252 In the end, my answer to those dissatisfied with the status quo is that the answer doesn't lie in trying to reformat or rethink existing mainstream stations, which continue to do an excellent job. Instead, the solution seems to lie with broadening our horizons, both formatically and geographically.

6253 I strongly urge you, on behalf of our artists, audiences and all those sharing my passion for radio, to approve all three of the complementary applications before you. I may not have much money, but I, for one, find the wealth of new radio options more rewarding than anything I have heard in years.

6254 THE CHAIRPERSON: Thank you.

6255 We have no questions.

6256 MR. BRAY: Thank you for allowing me to participate.

6257 THE CHAIRPERSON: Not at all. Thank you for being here.

6258 Mr. Secretary.

6259 THE SECRETARY: Thank you, Mr. Chairman.

6260 The next appearing intervenor is Mr. Ben Miner.

INTERVENTION

6261 MR. MINER: Thanks for having me here.

6262 My name is Ben. I'm a 24-year-old stand-up comic. I have been performing for around six years now and I really like to make people laugh. And like to make people laugh in this country. I like doing it here. It's unfortunate that ever since I have been a fan of comedy, since I can remember, I have seen Mike Myers leave, Jim Carrey, Norm MacDonald.

6263 I want to stay here. I love this country. There's no grants to help out stand-ups. There's no government subsidies. I mean, we are treated poorly by our government. I feel a little hurt.

--- Laughter / Rires

6264 COMMISSIONER LANGFORD: Don't you get taxed like everybody else?

6265 MR. MINER: Easy.

6266 COMMISSIONER LANGFORD: That's equality.

6267 MR. MINER: Assuming I paid them.

--- Laughter / Rires

6268 MR. MINER: I mean, I haven't done Just for Laughs or I haven't been on TV. If you recognize me, it's because I have the same suit on as yesterday.

--- Laughter / Rires

6269 MR. MINER: I just changed a shirt and tie. I thought I would fool you.

6270 But I love what I do. I think that it's important that we take pride in what we have done as a country. We are known worldwide as much for our peacekeeping efforts and for saving lives as we are for putting smiles on those same people's faces.

6271 This is a long legacy that I'm proud to carry with me. I'm so happy to be a Canadian comic. I couldn't think of anything else I could be. I don't think you would trust me as a brain surgeon.

6272 I just love this. I love this place. Like they were saying a while ago, it's really hard to get it going on TV. It's very expensive. Ten thousand dollars development in television doesn't go a long way. Ten thousand dollars in radio, that just fed me and a few of my buddies at the club. Because it's hard up for work. We really do struggle for this.

6273 I do it for the love. I don't do it for the free pop and the chips I get some nights. I have slept on floors, I have slept in bath tubs and I do this because I love it.

6274 With Laugh Canada, they are giving us an opportunity to get beyond that, to work towards something other than moving to the States. That's something I really hold close to me. I think it's a very worthwhile reason to support this bid because we have to acknowledge our heritage. I'm proud to.

6275 THE CHAIRPERSON: Commissioner Langford.

6276 COMMISSIONER LANGFORD: Thanks for that.

6277 MR. MINER: You are welcome.

6278 COMMISSIONER LANGFORD: I'm putting you down as undecided.

6279 There are some comedy stations, channels, I think. I'm just whipping through these listings. I have the SIRIUS one in front of me, but I think there are comedy ones on XM and SIRIUS now.

6280 Do you know if any Canadian comics are getting on those?

6281 MR. MINER: None that I know of. Then, again, I don't exactly run with the high crowd. I just started doing comedy. The guys at my level aren't even on the map when it comes to this stuff, in the States and everything. That's why this bid is so important, because it's going to give us that window of opportunity to be seen by the people that can really make or break us worldwide.

6282 Like I said, I would love to stay in Canada and do that.

6283 COMMISSIONER LANGFORD: Right.

6284 MR. MINER: I live with my mom and she won't move with me.

--- Laughter / Rires

6285 COMMISSIONER LANGFORD: She makes you sleep in the bath tub?

--- Laughter / Rires

6286 MR. MINER: I would rather not get into it.

6287 COMMISSIONER LANGFORD: You should break away, really.

6288 Thanks for coming.

6289 MR. MINER: Thanks, Dr. Phil.

6290 THE CHAIRPERSON: Mr. Secretary.

6291 LE SECRÉTAIRE : Merci, monsieur le Président. La prochaine intervention sera présentée par M. Christian Legault.

6292 On m'avise que M. Legault n'est pas présent, alors son intervention demeurera au dossier comme étant non comparante.

6293 La prochaine intervention will be presented by the School of Creative and Performing Arts of Humber College, Mr. Joe Kertes.

INTERVENTION

6294 MR. KERTES: Good afternoon.

6295 I'm Joe Kertes, Dean of Creative and Performing Arts at Humber College. I'm also cofounder, with Mark Breslin, of the world's first post-secondary full-time program in comedy writing and performance. The program has been so successful, we have an undergrad program, a post-grad program, a summer workshop and even a national touring workshop.

6296 We founded the program in the belief that we could keep comedians here and export their comedy, instead. The uniqueness of the program has attracted international attention. Visiting faculty and speakers have included Mike Myers and Andrea Martin, Eugene Levy, Dan Akroyd and the first chair of our advisory board was the late-Steve Allen.

6297 Our aim, as a college, unlike the universities, is to help graduates into their fields. Our programs are applied in nature. Canadian satellite radio will have a comedy station and has committed to allowing our students and graduates access to the airwaves and to produce original programming. The service will provide our students and graduates exposure the broader national and international market, but they will also provide experience at having their art honed in the real world.

6298 What's exciting about CSR's proposal for us at Humber, and for me, as Dean of Creative and Performing Arts, is that our gifted and ambitious students could be catapulted to the world stage without leaving our country. For the first time, the age-old trend can be reversed, I think.

6299 And I feel compelled to add, just because I used to be a student of Marshall McLuhan's, that you cannot forestall new technologies just because you are afraid of the consequences of them. I'm sure you all know that and you think about that every day.

6300 We are living in a post-national era, so either we participate in the technology or we become overwhelmed by it, I think.

6301 That's it. Thank you very much.

6302 THE CHAIRPERSON: Thank you.

6303 We have a few questions for you.

6304 MR. KERTES: Okay.

6305 THE CHAIRPERSON: Commissioner Pennefather.

6306 COMMISSIONER PENNEFATHER: Really just, thank you. Your point is very clearly made this afternoon and in your written intervention.

6307 MR. KERTES: Thank you.

6308 COMMISSIONER PENNEFATHER: Similar to what Commissioner Langford just asked, considering the presence of three other comedy channels already, as I think I remember on the XM service--

6309 MR. KERTES: Yes.

6310 COMMISSIONER PENNEFATHER:  --are Canadian comics currently, as far you know, are some of your students getting access to--

6311 MR. KERTES: Yes, some of them are, but this will provide kind of a guaranteed pathway for them that they don't now have.

6312 COMMISSIONER PENNEFATHER: So you are thinking that Laugh Canada is the best approach--

6313 MR. KERTES: Yes.

6314 COMMISSIONER PENNEFATHER:  --as opposed to the lateral programming?

6315 MR. KERTES: Yes, I do.

6316 COMMISSIONER PENNEFATHER: Thank you.

6317 Go ahead.

6318 COMMISSIONER LANGFORD: This is absolutely irrelevant to what we are doing here, and I will probably be shot for wasting yet more time, but where do your students go now when they graduate?

6319 MR. KERTES: They sort of wander around the streets aimlessly.

6320 COMMISSIONER LANGFORD: They are sleeping in bath tubs, aren't they?

6321 MR. KERTES: Yes, they are.

6322 COMMISSIONER LANGFORD: I was wondering who that was on my third floor.

6323 MR. KERTES: Actually, there is a nice network in Canada in clubs, especially in Toronto, for sketch and for stand-up. They have the Yuk Yuks organization at their disposal and certainly they perform at the Rivoli and so on and work their way up to Second City, if they can.

6324 They do some things, but they wait on tables, too.

6325 COMMISSIONER LANGFORD: How many waiters are you creating a year?

6326 MR. KERTES: We are creating too many. The program is very popular, I must tell you. We have 60 undergrads, but we have over 700 applicants each year for it.

6327 COMMISSIONER LANGFORD: Wow.

6328 MR. KERTES: By the way, I must add, also wasting more time, that one of almost graduates, Jeff Healy, is in the room. I'm very proud to have him here.

6329 I also look after the music program and he almost graduated from that program. See, he did well.

6330 COMMISSIONER LANGFORD: At his stage, you can call him an alumnus, we don't mind.

6331 MR. KERTES: Yes, I guess I could.

6332 COMMISSIONER LANGFORD: Thanks very much.

6333 MR. KERTES: Thank you.

6334 THE CHAIRPERSON: Thank you very much.

6335 MR. KERTES: Thank you.

6336 THE CHAIRPERSON: Mr. Secretary.

6337 THE SECRETARY: Thank you, Mr. Chairman.

6338 The next appearing intervention will be presented by Susan Aglukark.

INTERVENTION

6339 MS AGLUKARK: My name is Susan Aglukark and I am here to speak in support of the application made by Canadian Satellite Radio.

6340 As an artist, I have had the opportunity to travel extensively, performing for political leaders and spreading messages of hope to the disenfranchised in remote and northern communities.

6341 I am a small town girl at heart and that will always be a part of my music. Partly because of this, I believe that it is our cultural responsibility to reach out to listeners in all parts of our country and to make our voices heard across the continent.

6342 I believe that satellite radio will finally help to give aboriginal artists a voice that they so richly deserve. Our native artists will finally reach people in all areas of our country, including those listeners that have had far too little choice for far too long.

6343 With its diversity of formats, satellite subscription radio will make an essential cultural contribution. Moreover, numerous Canadian artists, who wouldn't normally receive much airplay on conventional stations, will be afforded the opportunity to have their music heard by a much wider audience, both across Canada and in the important U.S. market.

6344 The opportunity for our artists to reach out even beyond our borders can't be dismissed. This, in turn, affords artists like myself increased touring opportunities and CD sales. Most importantly, we have an effect way of reaching our audiences wherever they may live.

6345 It seems clear that this is the next step in the evolution of radio, one that is critical to the artistic and financial success of Canadian performers and artists. I strongly urge you, on behalf of our artists and their audience, to approve the Canadian satellite radio application.

6346 Thank you.

6347 THE CHAIRPERSON: Thank you very much.

6348 Your presentation is very clear.

6349 MS AGLUKARK: Thank you.

6350 THE CHAIRPERSON: Thanks.

6351 Mr. Secretary.

6352 THE SECRETARY: Thank you, Mr. Chairman.

6353 The next appearing intervention will be presented by an almost-graduate of Humber College, Mr. Jeff Healy.

--- Laughter / Rires

6354 THE CHAIRPERSON: Everybody is doing comedy now.

--- Laughter / Rires

6355 THE CHAIRPERSON: Thank you, Mr. Secretary.

INTERVENTION

6356 MR. HEALY: Thank you and good afternoon, ladies and gentlemen and members of the Commission, wherever you may be.

--- Laughter / Rires

6357 THE CHAIRPERSON: To our left, Mr. Healy.

6358 MR. HEALY: Oh, thank you.

6359 I should have brought my cane and I could have sort of sussed you out that way. Nothing personal.

6360 Yes, well, first of all, let's clear up one. I went to Humber for a month-and-a-half. Does that put that to bed? It was the most fun month-and-a-half stay as I have ever had, actually.

6361 The problem, I think, maybe, with speaking this late in the game is that most of whatever I would want to say has been said, and a lot better than what I could. I am really, by my own admission, not a speech-maker and not fond of speech-making, which should give you a rough idea of the commitment that I have to the intentions of Canadian satellite radio and why I'm here to show support for it.

6362 As a musicologist and a musician, and now a manager of a bar that has intentions to promote Canadian talent, I'm very interested in seeing Canadian talent and the awareness of it spread around the world as much as possible. I think that Canadian satellite radio stands to do a good job of that, particularly in speciality fields that I tend to support, jazz, traditional jazz, in particular, and blues.

6363 A lot of our artists which, at the moment, the best that they can hope for broadcasting and availability of broadcasting is university stations which, in some cases, hardly get off the campus, and maybe the odd public radio station in a major market, which also doesn't have as much of an outreach as certainly a satellite stations or satellite stations would.

6364 Also, Canadian satellite radio intends to make programs for the U.S. stations, which will further expand the awareness of Canadian artists and so forth. I certainly look forward to that. It would be great to have such an outlet to promote the acts that are coming through Healy's, which happens to be at 178 Bathurst--

--- Laughter / Rires

6365 MR. HEALY:  --on the southwest corner of Bathurst and Queen.

6366 Generally, our mandate is to promote a lot of up-and-coming talent. We have taken great pride in such artists and The Trues, a great band that's doing very well, and they were, I guess, discovered, if you will, at Healy's.

6367 I am very passionate, to say the least, about trying to, once again, expand the awareness of up-and-coming Canadian talent and those of us that have been around for a couple of years.

6368 I think that's probably enough of your time that I will take up.

6369 Thank you very much.

6370 THE CHAIRPERSON: Thank you, Mr. Healy.

6371 Commissioner Langford has a question for you.

6372 COMMISSIONER LANGFORD: Just one question. It may lead to something else or may lead to--

6373 MR. HEALY: I'm far better at answering questions than I am at making speeches.

6374 COMMISSIONER LANGFORD: Excellent. I have 300 questions for you.

--- Laughter / Rires

6375 MR. HEALY: Fabulous. I have time. My flight leaves in a couple of hours.

6376 COMMISSIONER LANGFORD: You talk about some of these bands. We have had all kinds of names here, some of them we have heard of, some of them we have never heard of, and yet the people who are talking about them, independent people, are incredibly passionate about them. They say they can't get on the radio.

6377 How do the people who get on, get on? Is it mostly luck? Why do some make it to the top, when others people like you and other people talk about with such passion just simply don't get anywhere? Is there any--

6378 MR. HEALY: Well, I suppose that sitting in this position here I should be polite to program directors, who I'm sure are around. The short answer is, I don't know. I think luck does have a certain part to play. I think there is a certain amount of right place and right time.

6379 Let's face it, sometimes, if a certain manager or representative in some field, agents or whatever, happen to state that this artist or this band, or what have you, is the next big thing, we will tend to take their word maybe, more than somebody we have never heard of. That might have a certain amount to play in it, too.

6380 I think that Canadian satellite radio here is offering a chance to everybody. With that amount of programming availability and time, as many artists as possible can be programmed and let the public make the decision.

6381 COMMISSIONER LANGFORD: In your own club is a very small microcosm of what we are talking about.

6382 MR. HEALY: Yes.

6383 COMMISSIONER LANGFORD: Do you personally audition everybody who comes down there?

6384 MR. HEALY: I certainly started off doing that and it got to be a far bigger job than what I could handle, plus trying to be a musician and a band leader of two or three different bands and a family person all at once. So I have a couple of other people that sort of take it on.

6385 But I'm certainly involved in a lot of the aspects of listening to the demo CDs that are dropped off and that sort of thing.

6386 Certainly, packaging, I must admit, does have a lot to do with it. If you have something that's just sort of haphazardly thrown together, then you tend to immediately have this stereotype that possibly the artist isn't as serious about what they are doing, and that can happen, too.

6387 COMMISSIONER LANGFORD: Thanks very much. We really appreciate you coming out.

6388 MR. HEALY: Thank you.

6389 THE CHAIRPERSON: Thank you, Mr. Healy.

6390 Mr. Secretary.

6391 THE SECRETARY: Thank you, Mr. Chairman.

6392 The next appearing intervention will be presented by Mr. Frank O'Dea.

INTERVENTION

6393 MR. O'DEA: Mr. Chairman, Madam Vice-Chairman, all the Commissioners, thank you.

6394 I come not to speak on behalf of any application, but rather as a consumer and for some of my friends and neighbours who, because of location, aren't able to receive adequate or any radio, at times.

6395 Recently, on June 28th, the federal election, I was up on the east coast of Georgian Bay. Some of our friends got together to listen to the election results and tuned into CBC Radio 1 and listened as the radio faded in and out. Sometime toward midnight we determined that there was a winner, but it was very difficult to hear and very difficult to ascertain what was going on that evening.

6396 People that live there year-round are without any adequate radio reception at all and what they do get is very poor.

6397 In a more recent incident, I was flying my aircraft up over Lake Superior late one night and my youngest daughter was asleep in the back seat and my older daughter, who was 11, was asleep on my arm. It was about two o'clock in the morning and it was a very quiet night as we flew over the great Lake Superior. I found myself struggling to stay awake.

6398 With satellite radio, we would have reception in the aircraft and we would have ability to switch channels and to become entertained. That would be a very important use for those of us who fly private aircraft in this country. Radio reception simply is not available in aircraft, as it is now, but with satellite radio that would clearly be available.

6399 Again, another incidence, where I found myself deep in the United States, in Florida, in fact, and another event was happening in Canada and, of course, Canada doesn't hit the news at all in the U.S., so phone calls were the only way to ascertain what was going on in Canada.

6400 Consumers need this program, they need this technology, they need these channels. I'm delighted to see that in all applications there's funding for Canadian talent. Canadian talent, as was pointed out much more eloquently than I can point out by the prior intervenors, needs a platform and this is a wonderful opportunity for them.

6401 I applaud their efforts and I applaud their efforts in coming here. I know it has been a long hearing and people have spent a long time waiting. I'm delighted to see that they are interested enough to be here before this Commission on such an important issue.

6402 So I applaud their efforts and I applaud yours for listening to all of it. The wonderful thing that I have heard, as I have been listening to the intervenors, is all the things I have missed on radio simply because these people aren't able to get time. It would be a wonderful opportunity, for those of us who are the consumers, to be able to have access to these wonderful Canadian talent.

6403 In short, I'm here to speak to those of us who do not have radio reception in many parts of our country. This being such a large country, it's so difficult to get any kind of reception.

6404 I wish to thank you for attention and thank you for your efforts. I hope that all applications for satellite radio are approved.

6405 Thank you.

6406 THE CHAIRPERSON: Thank you.

6407 Commissioner Langford.

6408 COMMISSIONER LANGFORD: I don't want to incriminate you to incriminate yourself, so you can feel free not to answer this. Plead the fifth, as they say in Hollywood.

6409 With your needs up in Georgian Bay and in your airplane, I hear you have been down in Florida, have you ever been tempted to just get one of these XMs or SIRIUS and just bring it back, as they say?

6410 MR. O'DEA: I find that the weather is a bit cool today so....

--- Laughter / Rires

6411 COMMISSIONER LANGFORD: I take your point. Thank you very much.

6412 MR. O'DEA: Thank you.

6413 THE CHAIRPERSON: Thank you, Mr. O'Dea.

6414 Mr. Secretary.

6415 THE SECRETARY: Thank you, Mr. Chairman.

6416 For the record, I would like to indicate that intervenor number 12, CHUM Limited and Astral Media Radio, have decided not to appear. The intervention will remain on the record as non-appearing.

6417 We will now hear the National Campus and Community Radio Association, Mr. John Stevenson and Tristis Ward.

INTERVENTION

6418 MR. STEVENSON: Mr. Chair, members of the Commission, it's a pleasure to appear before you today representing Canada's community and campus radio stations.

6419 My name is John Stevenson. I'm a former president of the NCRA, a former station manager at CFRU-FM in Guelph and a former jazz programmer at CKDU-FM in Halifax. I'm a long-time policy adviser to the NCRA and I currently sit on the association's advisory board.

6420 With me today is Tristis Ward, who is the station manager at CHSR-FM in Fredericton, vice-president, Development, of the NCRA. She tells me she has never been president of the NCRA. It's kind of unbelievable.

6421 Our reaction to the two satellite radio applicants can be summarized in one sentence: is this the best that Canada can do?

6422 We are all long-time supporters of diversity in radio, as community broadcasters, and we are excited by the potential of satellite radio in this country. Many of us work in community radio because we do not feel that we have been well served by commercial media in this country.

6423 We don't reject multi-channel subscription audio out of hand. But the satellite radio applicants who have appeared before the Commission over the last few days possess what we consider to be three major and really crippling deficiencies.

6424 First, the satellite applicants do not provide a satisfactory number of quality Canadian choices.

6425 Second, the approval of these applicants will have a significant negative impact financially on what are very fragile non-commercial broadcasters.

6426 And third, the applicants make no commitment to support or broadcast the programming of Canada's community radio stations.

6427 Let me elaborate on the first point. We do not object to Canadians having access to a variety of high-quality American audio channels. The problem is that the applicants are not proposing a high enough number of Canadian choices. A mix of Canadian and non-Canadian services, of Canadian and non-Canadian music and programming is the central positive characteristic of Canadian broadcasting, not just on radio, but on television and cable and direct-to-home satellite.

6428 These applicants represent a significant departure from several decades of Canadian broadcasting policy.

6429 Our concern extends beyond these services' music channels. We remind the applicants have proposed numerous channels of news, talk and sports, without any significant Canadian choices in these areas. It seems very absurd to us that a supposedly Canadian service would have more Spanish-language channels than French channels, that the applicants will presenting ESPN and not TSN, Fox News and not CBC Newsworld, Bloomberg, but not RobTv and a weather channel that probably won't present any Canadian weather information.

6430 XM and SIRIUS may be excellent services, but they are American services aimed primarily at an American audience. Canadians are left out.

6431 Both satellite applicants argue that a Canadian-owned and Canadian-oriented satellite audio service is not currently viable, and they are probably correct. But we cannot see the future and neither can the applicants.

6432 Technological change may make a Canadian satellite service viable in the future. But if the Commission approves these American services now, there will never be a Canadian service that we will be able to get off the ground.

6433 However, our primary concern today is the impact these services will have on the viability of the community radio sector. In their reply to our intervention, CRS states they fail to see how nationally broadcast programs on a subscription satellite service, which they claim will attract 10 per cent of consumers, would impact community radio services.

6434 Well, I want to tell them very clearly that those consumers are our listeners. Specialty music fans, fans of reggae, jazz, world music, blues and other genres are among community radio's most enthusiastic supporters. The applicants will be targeting these audiences and the result will be diminished support for community radio. Our stations have some of the best specialty music programming in North America, but we do not possess the bandwidth to compete with a national satellite service.

6435 It is also troubling that both applicants will be rolling out channels that are similar to what campus and community radio already offer. And I speak specifically of the XMU service on XM Radio, which is actually a clone of college radio in the United States and CBC Radio 3 on SIRIUS. Instead of partnering with us or approaching us to work with us, they are going to try to clone our service and recreate aspects of it in order to gain more listeners, our listeners.

6436 I want to make it clear that community broadcasters support programming diversity and wish to embrace technological innovation that can bring that about. But we must insist on services that reflect the objectives of the Broadcast Act, which states that Canada's broadcasting system will contain public, private and community components. Community media is missing from all these applications. Our programming is missing along with an acknowledgement of our role and the impact these services will have on us.

6437 However, satellite radio in some form will inevitably come to Canada, perhaps as the result of these hearings, perhaps in the years to come. But the changes that these services represent are already underway. Satellite radio is one of many new media including streaming internet audio that blur what were formally clear distinctions between the local and the global, between broadcasting and retail music sales. These new media collapse time and space and what is in danger of being lost is the local. Satellite radio and internet audio are wonderful at serving specialized yet geographically distributed audiences, but they fail when it comes to supporting local communities.

6438 As we move to more national and international services, and we are bound to have more in the next few decades, the local is in danger of being further marginalized. We believe that community radio is the most effective means by which the local can be preserved and nurtured in Canadian broadcasting. We are very inexpensive. The average revenue of our member stations is less than $120,000, the total revenue for the members of the NCRA in this last year was $2.9 million, not $29 million, $2.9 million. And unlike commercial and public broadcasters, our focus is always clearly on the local community.

6439 We urge the Commission to link the creation and expansion of the national audio services with support for local community broadcasters, and Tristis is going to speak to that.

6440 MS WARD: I am going to try to do that without too much overlapping, because I know it has been a long hearing.

6441 But the CBC said on air this past week in relation to their application, and this is not a direct quote though, imagine if you could drive from Halifax to Vancouver and never change the channel of your radio, just imagine. Imagine if you could skip over all of the regions of Canada or if you are listening to one of the American only channels, skip the entire country. You would miss out on all of the information, the news, the flavour, all the nuances of Canadian life in each of the towns, large and small, along the way. Satellite radio means cross Canada sameness.

6442 Now you have been discussing even just yesterday, that one of the perceived benefits of satellite radio is that all of the people in all of the small towns, all the way across the country will be equally able to tune into the same broadcast, nobody gets left out as a listener. It is a lovely sentiment, but we are talking about the equivalent of a Wal-Mart in every town. When CKUA voiced concerns regarding the possible affect the subscription services would have on community radio, SIRIUS responded that they could see their service as being complimentary to us as well as local commercial broadcasters. This is not correct.

6443 Duplicating our content is really part of the offer. This points has already been made and I won't belabour it here. I will only briefly reiterate that if the satellite applicants are granted licenses they should be required to provide a space within this new technology specifically for our broadcasters, not a professional imitation of us, but instead a contribution from us over their system. I submit that we must be included, otherwise the threat of being left completely behind is much greater. I can tell you that it is insufficient to pick one of our members as the third sector representative. Whatever single interest benefits are gained from that would never outweigh the damage done to the rest of us.

6444 With CHUM/Astral's proposal it is much easier. They have made statements regarding the availability of digital broadcasters being added under the system that they propose and we ask that the Commission require the commitment that community radio be assisted onto the digital spectrum by CHUM/Astral as a condition of licence. I have oversimplified this here I am afraid in an effort to be brief, a real commitment for the inclusion of community access broadcasters, in the markets they enter, is what I have in mind. Something which takes into account the effect a lack of resources has on a third sector.

6445 The effect of satellite services on Canada's broadcast system has been questioned throughout this hearing. Several times I have heard you ask presenters whether or not they have done a study on the matter. We haven't done one either. Even without a study we can make a few predictions here. Just as an example, the announcement made as part of CHUM's proposal... Nigel Oakley made a note that sales of digital radios in Britain have now surpassed sales of analogue radios. Whether we are talking about digital or satellite radio, the implication we can read from that is that the public is prepared to embrace this new direction for broadcasting very quickly.

6446 This isn't cause for panic for most FM broadcasters in Canada, but consider if you will the very slow motion of campus and community broadcasters. It is hard to put into words the expectations of non-profit organizations who populate the third sector. By definition, we are not in this game for money and we expect a certain lower level of resources as compared to private broadcasters and the CBC. With virtually no help at all for our important work, we join the ranks of other valuable services competing for scant community donations and for our campus stations having most of our funding controlled by young and impoverished students keeps us on shoestrings and creates an atmosphere of instability. This struggle to simply get by through whatever creative means we can has caused us to be left further and further behind the rest of the broadcast system. Because of a lack of support the community sector has been kept in a state of perpetual retardation. We are not about to launch a satellite network of our own. We are not even able to consider the option of digital. And many of us cannot even make the small step into high power and are now in danger of losing our options with regards to applications for low power.

6447 Our sector, by and large, is not able to fulfil the mandate stated in the Broadcast Act, section 3(d)(iv), which says, "The Canadian broadcasting system should be readily adaptable to scientific and technological change." Now this is not a failure of the dedicated few who have been working hard and burning out in this sector. It is a failure of the broadcast system as a whole and it needs to be addressed by you, the architects of that system, at the earliest possible time, this may well be it.

6448 I am here to ask that a condition of licence for any applicant you approve include the unambiguous provision for third sector funding and that you make that provision part of the policy you are developing in tandem with this hearing. I will get onto how much in a moment, but first let me tackle the problem of squeezing us into CTD funding requirements which has been the only option to date and was stated by a prior intervener. Regardless of how this sounds, we are not complaining about the projects this funding has provided for our sector. Furthermore, such funding projects are applicable in a lot of ways, but CTD has serious limitations in regard to the total work of campus community radio and the time has come to create funding which addresses the whole of who we are and better answers our needs.

6449 CTD funding gets a lot of attention at these hearings and it is an important and beneficial requirement made of Canadian broadcasters. But these new services are going to affect a lot more than just Canadian musicians. Please understand, we care a great deal about CTD and dislike the appearance that we are competing with the recording industry for available funding. For all listeners across Canada, including the people who live in the large cities as well as those who live in small town in between, satellite radio and, to a lesser degree, national subscription radio will bring about an increasing loss of their personal connection to their community. Money thrown at CTD funding does not adequately address this and never will.

6450 It has been said over and over that the benefit of funding for Canadian artists is supplemental to the real benefit of airplay as regulated by the Commission. In many communities outside the major urban centres where CTD funding gets distribution as per the promises made by broadcasters the still fledgling music scenes are almost completely ignored by distant owners. And the only real and constant support they get is from their community station which is also the broadcaster which gives voice to all other aspects of the community from string free and generously supplied public service announcements to broadcasts of non-playoffs, non-professional sports games, to the many different languages and voices of the mosaic of communities within the larger one.

6451 If any of these subscription radio services are approved we ask that you make it a condition of licence that they make contribution of five percent annual expenditure towards a Canadian community radio fund. That fund is to be used exclusively for the development and support of third sector broadcasting and controlled by a board made of members of that group. We recognize the similarities as well as the differences between our proposal and CKUA's. We are aiming a little higher, true, because we have more dire need and having worked with so many more stations and so many different situations across Canada. We also see a distinct difference between the need to fund our sector as part of the broadcast system and the need to protect and encourage and develop our artists.

6452 Further, we ask that this policy being developed here include the provision for this fund in keeping with the mandate of the Broadcast Act under section 3(d)(iv). The NCRA has been in contact with other representative organizations within our sector and I have provided for your benefit, I have no idea if you got it, a letter from ARC Canada expressing their agreement with our proposal. We have also been talking to AVR. For all the promises made regarding monetary contributions and proposals for channels they, like us, have a need for a healthy sector beyond the patchwork of promises they have been given.

6453 When I was talking to Mark Macleod about this I did not ask if he was interested in sending a letter in, I probably should have. AMARC, which is the global organization concerned with community radio, has also voiced their support for this proposal, although not in writing again. They would not be members of the governing committee for this fund as ARC Canada and AVR would, but they do recognize the need and the benefit. We have not had the opportunity to sit with these groups and completely workout a formula which would serve the needs of our sector in the most fair fashion, however we do have a rough breakdown of a formula that we believe answers most of the problems and I would be happy to go into that if you have any specific questions.

6454 The chart, if you have it, labelled NCRA AMRAC membership revenue statistics was drawn-up as a means to of showing the diversity we have to take into account when we are looking at division of any national funding created in our sector. The figures presented should also remind you though of the level of operating funds which we look at everyday. Thank you.

6455 THE CHAIRPERSON: Thank you. Commissioner Pennefather.

6456 COMMISSIONER PENNEFATHER: Thank you. Good afternoon. As you were going through I realized you were answering a number of the questions I had following from your written intervention, namely just to clarify what you had in mind in terms of the Canadian community radio fund. It was not clear that you saw this as a fund separate from CTD, which I assume you still think is an important component of radio in this country?

6457 MS WARD: Absolutely, and even just listening here at the hearing to the multitude of artists who have come up. And people, when they mention well we don't get any airplay in Canada, oh well we do but it is at the campus or community level and therefore there isn't enough of it, not enough people hear us. I think that the real tragedy here is that this service that is now being worked on and the people are applying for, it has already been done. If the third sector had been properly funded in the first place maybe the artists would have had a whole lot more exposure to begin with and they wouldn't be looking at American solutions for that.

6458 COMMISSIONER PENNEFATHER: Okay, thank you very much.

6459 THE CHAIRPERSON: Just one follow-up question. I can understand your point about funding and your point about access to whatever service there is. I was a little harder pressed to understand your point about impact of the satellite services given your highly localized community base and the rather niche, you called it an American university channel that would come off the satellite. I am not quite sure how I see that impacting you adversely. Perhaps you can elaborate.

6460 MR. STEVENSON: The American... the XMU channel or just...?

6461 THE CHAIRPERSON: That is the one you referenced but if there are other reasons for feeling there would be that impact. Would you see your typical listener as a potential satellite radio subscriber?

6462 MR. STEVENSON: We would. They are typically, and I don't want to over generalize, the typical campus community stations have a wide variety of programming, they might have jazz for three hours and classical music on Sunday mornings and three or four blues shows and a punk show and so on and this will be distributed over the week in a series of one or two hour blocks. And we often receive support from listeners to these specific shows, jazz fans and communities that don't have a jazz radio station which is the vast majority of communities in Canada. So obviously, I am a jazz fan myself and I would like there to be a jazz radio station in Ottawa. There isn't one and there is very unlikely to be one, so if a satellite radio service were to offer a variety of jazz channels and I think XM has four of them, three or four, I would be very interested in subscribing, as opposed to on Sunday morning when CKCU locally does its jazz program, trying to tune into that and remember to tune into it and so on, and that is the danger for every kind of specialty music that we do.

6463 XMU has a punk channel, they have two retro alternative channels, they have an unsigned band channel and all these things are fine, but the notion that that won't impact on our listeners who like diversity in media and want to hear these kinds of music is absurd, they're obviously going to have impact on us. The XMU channel is probably the most blatant of these attempts. If we do general music programming which tends to be non-hits, alternative, indie, pop and rock music, that XMU channel covers that off. And again, it is intended it is called XMU, because the U is universal. It is an attempt to sound like an American college channel and XM is very good at that and that is fine. I don't really begrudge them having a channel like that in Canada at some point, but the impact it is going to have financially on our stations is it is going to be real, we don't have large revenues from donors. And when alternatives services come in that provide 24/7 with no CanCon, that has to have an impact.

6464 MS WARD: If I may, there is also... I mean, this is a one two punch and, again, this gets back to what I was trying to talk about, which is a little bit more long-term. Everybody that has been up here has been talking about the fact that we don't really know what is going to be happening with what is right now regular broadcasting in Canada with the development of this new media.

6465 The only thing that we as community broadcasters know is that with our limited resources and the fact that we are under funded we are getting constantly left behind. This is the next leap. We can't make this leap ourselves. We can't follow even necessarily where the commercial broadcasters may go in answer to this. I am looking down the road in the future and I am thinking we have to worry now that there may be... we might find ourselves alone later on in a band that now no one even has a radio for, it is possible.

6466 THE CHAIRPERSON: Do you see your long-term future being... you say you don't have the resources to go high power or to go digital or to even go lower power.

6467 MR. STEVENSON: Well, I made a separate submission... the group of us who are ex community and campus broadcasters made a submission and in that submission I said that the danger is that these stations will be nothing more than radio clubs, that where people come in and they spin some records and like the old carrier current or closed circuit channels that... radio stations that used to have on campus in the 1950s. My mother did that in the 1950s and it is a hobby activity. The problem is that community radio in English Canada, we are it. The sector in Quebec is doing quite well and has received a certain amount of funding so it can reach a critical mass of sustainability for the most part. And it isn't just these particular applicants being approved, but the trends within the marketplace are toward more choice and on one hand we welcome that, but on the other hand that is going to mean that the community broadcasting function in these communities is going to be diminished just because the revenue is going to be cut off because we can't get it from people we had gotten it from before. So, I think this fear of a set of radio clubs is quite likely to happen in the next 20 years.

6468 THE CHAIRPERSON: So your position is oppose all the applications to maintain the status quo?

6469 MR. STEVENSON: I personally don't consider the status quo to be tenable and it is not tenable for the people that work in the sector. And I don't want to argue against people having a choice of more jazz music, you know, in Ottawa or any other city. We should be able to have a circumstance where the local is supported and the diversity is also available to people, that should be an option.

6470 THE CHAIRPERSON: Just to understand your intervention, you start off by opposing all three applications and I guess you have evolved let us say to a position where you say licence them with the fund and with some access for your programming?

6471 MR. STEVENSON: Our expectation is that something like this will be... whether you have 35 percent Canadian on some of these channels, I mean, that would be what we would see in some future event that that way would be... you would have a jazz channel, but it might be 35 percent Canadian. I mean, there is already internet streaming audio where you can get plenty of jazz formats. So, I think these applicants are not... I don't, from my reading of the history of Canadian broadcasting policy, these applicants are not good applicants, except for the CHUM application. The two satellite applications are not consistent with that policy. But we know that inevitably and something will be approved at some point, we are already dealing with streaming internet audio, which may become more accessible.

6472 MS WARD: And you can chalk it up to fierce independence within our sector, but we have slightly different opinions up here too. Well, first of all, what the NCRA... in our intervention we specifically said that we are here to talk about the policy and we didn't necessarily say that we were opposed to any of the applicants. However, I would say--

6473 THE CHAIRPERSON: I don't want to contradict you, but that is what you do say.

6474 MS WARD: The Rob Smith's one?

6475 THE CHAIRPERSON: All three applications.

6476 MS WARD: Oh okay. Oh, I am sorry, I misread what Rob wrote. But I guess then, for me, sitting here in this hearing, again, the satellite ones, as a Canadian citizen, I disagree with them as a direction for the CRTC to allow our broadcasting system to go. For the CHUM one actually I was fairly impressed with it, but I would like to see condition of licence that protects the sector within that as well.

6477 THE CHAIRPERSON: Thank you. Mr. Secretary.

6478 THE SECRETARY: Thank you, Mr. Chairman. We will now hear the intervention by CHIN Radio International, Mr. Lenny Lombardi.

6479 THE CHAIRPERSON: Okay, while we are waiting, our intention is -- go ahead, Mr. Lombardi, and take your position -- our intention is to call a break after this and then return with reply. There were some undertakings as I recall, although I don't recall them specifically, on behalf of the applicants to file certain material prior to the reply stage. We don't have any material filed so I know that, so if you could during the break either file that material so that we could examine it or have a discussion with the secretary or counsel as to your understanding of our understanding with regard to those undertakings it would be useful. Because we had intended to review them at the break, which will be right after this intervention, and then to discuss them with you on final reply. Were there ones from CHUM as well? I thought Mr. Miller had given certain undertakings that were related to the reply but, again, you can clarify that. And if you could get them to us the length of our break will be determined by the length of your material.

6480 COMMISSIONER LANGFORD: So take your time is what he is saying.

6481 THE CHAIRPERSON: Mr. Lombardi.

INTERVENTION

6482 MR. LOMBARDI: Thank you, Mr. Chair, Madam Vice-Chair, Members of the Commission. For the record, my name is Lenny Lombardi and I am President and CEO of CHIN Radio/TV International.

6483 CHIN was founded in 1966 by my father, Johnny Lombardi, and today CHIN owns and operates two ethnic radio stations in Toronto, AM 1540 and FM 100.7 and a new ethnic radio station Ottawa/Gatineau, FM 97.9 which we are very proud to say is celebrating its first anniversary. And we also produce multi-lingual and multi-cultural programming for distribution on Citytv.

6484 There was a long history of cooperation between the CHIN and CHUM organizations. My father and Allan Waters are both Canadian radio broadcasting pioneers with a gift for innovation; my father, in the area of multi-lingual and multi-cultural broadcasting and Allan Waters and sons in the development of new formats for mainstream radio and TV.

6485 Our two companies have often worked together to ensure the availability of high quality, culturally diverse radio and television programming. As such, I am pleased to appear today in support in CHUM subscription radio application and there are three principal reasons why CHIN supports this application. First, we support the CHUM subscription radio service for its firm commitment to Canadian content and to Canadian produced programming services. Second, we believe that the approval of CHUM's application will best serve Canada's ethnocultural communities. Third, we believe that the approval of this application will support the growth and development of digital radio in Canada and that such an outcome would be in the interest of both listeners and radio programmers and broadcasters.

6486 First, we commend CHUM for their commitment to offer diversity of Canadian produced subscription radio services that will comply in full with the existing Canadian content regulations. We believe that the policy and regulatory framework the Commission has established for commercial radio has been effective. Listeners have access to a wide range of high quality Canadian produced radio programming services with a diversity of formats. By regulation, all of these services offer at least the minimum level of Canadian content appropriate for their format. This ensures that Canadian radio provides strong support and exposure for Canadian musical artists while at the same time having the flexibility to offer a wide range of musical selections from around the world.

6487 Over the years subscription radio promises even greater choice and diversity for listeners through more highly targeted niche formats and the absence of commercial advertising. Like CHUM, we believe that this can best be accomplished with Canadian produced radio services that operate within the existing rules and which therefore support the growth and development of Canadian musical artists.

6488 Second, we applaud CHUM's commitment to cultural diversity and the way in which that commitment is reflected in this application. In addition to programming services in both official languages, CHUM is also proposing to offer Canadian produced programming services in third languages along with a full service channel devoted to Canada's Aboriginal community.

6489 Canada's experience with cultural diversity is unlike that of any other country. We have created an inclusive Canadian citizenship in which all citizens can retain their ethnocultural identity and take pride in their cultural heritage while at the same time having a sense of belonging to and involvement in the larger Canadian community.

6490 The Commission's ethnic broadcasting policy has supported the development of Canadian third language programming services that reflect our concept of an inclusive citizenship. These services connect listeners to their traditional languages and cultures while, at the same time, promoting increased understanding and discussion of Canadian institutions and values. This is something that foreign third language programming services simply cannot do. The approval of CHUM's application will ensure that Canada's cultural diversity and the objectives of the Commission's ethnic broadcasting policy are fully reflected from the start in the next generation of Canadian radio programming services.

6491 Third, we are in favour of the CHUM subscription radio application because it will support the growth and development of digital radio in Canada. Digital radio has many potential benefits for listeners, from crystal clear sound to increased choice and diversity of programming formats to interactive software that permits a variety of enhanced features. For programmers, digital radio eliminates the technical disadvantages of AM versus FM frequencies and opens the door for existing broadcasters to expand their services and for new programmers to enter the market.

6492 Digital radio holds especially great promise for ethnic radio broadcasters and programmers. There is a strong demand for ethnocultural communities for a greater choice and diversity of ethnic radio services, particularly for services designed to serve specific ethnocultural communities in only one or a limited number of third languages. In many markets, such as Toronto, the scarcity of analogue radio frequencies now makes it difficult, if not virtually impossible, to introduce new broad based multi-lingual ethnic radio services, let alone services that target specific ethnocultural groups. Digital radio could address this problem, but there is a chicken and egg dilemma. Ethnic radio broadcasters and programmers are reluctant to invest in new digital radio services until there is a large enough installed base of digital radio sets to give them access to a reasonably large audience. However, until there is an attractive content of digital radio listeners will continue to be reluctant to acquire a digital set. Approval of the CHUM application will help resolve this dilemma.

6493 Digital radio sets designed to receive the CHUM subscription radio service will also be capable of receiving existing and new free over the air digital radio services. As such, as the subscriber base for the CHUM service grows so too will the potential listener base for other over the air digital radio services. Moreover, as the volume of production of digital radio sets increase to meet the demand for the CHUM service, prices for all digital radio sets, whether they are to be used with the CHUM's subscription radio service or not, can be expected to fall. This will further increase the likelihood that listeners will choose to purchase a digital radio receiver and in doing so will help establish the large audience base necessary to support a variety of new innovative digital radio services including third language radio services.

6494 So, to conclude, the Commission has developed significant policies over the years, however none have been more significant in shaping Canadian broadcasting than the 35 percent CanCon requirements and the ethnic broadcasting policy. The Commission has the opportunity to do the same for digital radio in Canada as it has done for ethnic broadcasting and Canadian talent.

6495 Thank you for allowing me to present CHIN's view today and I look forward to your questions.

6496 THE CHAIRPERSON: Thank you. Commissioner Pennefather.

6497 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman, and thank you for being here, Mr. Lombardi. I gather from your presentation you see digital radio and its advancement as a very important reason for your support for this particular application in terms of ethnic services as a benefit. Can you comment on any concerns that you would have regarding subscription radio in general on ethnic services? The previous intervener was very concerned obviously, in CKUA, earlier about college campus stations. Is there any concern that this kind of service would have a financial impact on ethnic services in this country?

6498 MR. LOMBARDI: Thank you, Madam Commissioner. I believe that the service can be best utilized to extend to markets that currently don't receive any ethnic services. There are many many places across Canada that there are populations of Italians and Ukrainians and Greeks, Portuguese who aren't able to receive any type of ethnic programs. So, you know, these would certainly be a way of giving programming to those different communities.

6499 In the larger urban markets, which I believe you are referring to, as long as the programs focus on alternative programming, program concepts, niche programs within the ethnic market, remain non-commercial, do not provide any local content but are strictly national. I don't believe that there would be any undue financial impact. There may be obviously some migration of listeners, but the nature of ethnic programming is fiercely local and as long as that is protected I think they can actually compliment each other.

6500 COMMISSIONER PENNEFATHER: Thank you. Thank you very much for your intervention.

6501 THE CHAIRPERSON: Thank you, Mr. Lombardi, those are our questions. We will resume with the final replies at 5:00 p.m. Nous reprendrons à 17 heures.

----recess at 16:33

----resume at 17:06

----Phase IV, reply begins at 17:06

6502 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plait. Mr. Secretary.

6503 THE SECRETARY: Thank you, Mr. Chairman. In reply, we will hear the applicants in reverse order, so we will hear now from CHUM Limited and Astral Media Radio Inc. You have 10 minutes to make your reply.

REPLY / RÉPLIQUE

6504 MR. SWITZER: Thank you, Mr. Secretary. Mr. Chair, Madam Vice-Chair, Commissioners, before we begin, just for the record, I would like to just quickly reintroduce the panel. To my far right, Peter Miller - CHUM; Paul Ski - CHUM; Ian Greenberg - Astral; Jacques Parisien - Astral; Denis Rozon - Astral; Madame Claude Laflamme - Astral; Fred Sherratt - CHUM; Duff Roman - CHUM; and Kerry French - CHUM.

6505 We are very pleased to have this opportunity to reply to the interveners that appeared before you over the course of the last two days. However, before doing so, we would like to take the opportunity to thank the many individuals and organizations that filed interventions in support of our application. We very much appreciate the time and effort that was put into their submissions.

6506 Over the last two days a number of interveners have raised similar issues: that services should make maximum use of Canadian creative resources; that any subscription radio service licensed in Canada must comply with Canadian ownership and control requirements; and, that subscription radio service should not be permitted to solicit advertising. We agree. We intend to operate a subscription radio service that achieves Canadian content levels comparable to conventional radio, is Canadian owned and controlled and does not solicit advertising.

6507 In general, very few interventions raised any specific concerns with the CSRC application and, as a result, we have limited our reply to discussion of the following issues: one, the availability of our service; next, the concerns of the music industry relating to copyright protection measures; and finally, how our service will add diversity to the system.

6508 We heard the concerns raised by members of the Commission yesterday, about the 60 percent coverage projected by CSRC and what that means for Canadians who can't get our service right away. You will recall that in all of our filings we have consistently said that if we can find ways to move farther and faster we would definitely do so. Our original model assumed one equitably licensed competitor. In response to these concerns, we revisited our coverage scenarios with new assumptions based on CSRC being the only licensee. Under that scenario, we could approach coverage of 75 percent of the Canadian population within the first licence term and do it within the current business plan, that is with capital supplied by bank financing and thereafter from cash flow. There would certainly be some differences, subscriber levels and revenues would be higher as a result of covering more people, our costs would also be higher, not just capital, but the cost of operating this expanded area that covers relatively few subscribers.

6509 We would also achieve greater efficiency in transmission costs in the later years of the business plan and through perhaps use of lower power, less costly transmitters in some smaller locations. This will allow us to add over 50 smaller communities to our coverage plan, communities such as Sudbury, Kelowna, Thunder Bay, Moncton, Cornwall, Chicoutimi, Penticton, Prince Albert, Brandon, Moose Jaw, Rimouski and the list goes on. As well, complete coverage of the highway corridor from Windsor to Quebec City will be added, to the Edmonton to Calgary corridor and the Fraser Valley corridor which will be achieved earlier. It has always been our intention to continually research how we can expand the service so that it is available to greater number of Canadians. For example, as we noted yesterday, we will look to partner with broadcasters in smaller markets, CSRC affiliates and look to other technologies such as broadband, for example, to deliver the service.

6510 MR. MILLER: A number of representatives of the music industry, including CRIA, have advocated that the Commission require licensees to implement copy protection measures to ensure that music broadcast is not unlawfully exploited by subscribers or others. We are pleased to report that we have had meaningful discussions with these organizations and can confirm that the first CSRC receivers will be self-contained units with no digital outputs and that, in future, any receiver that does have a digital output incorporates appropriate digital rights management or DRM protection. We can do this because we control the entire system that is the basis of our proposal. We firmly believe that the creation of a secure service that protects the music of Canadian musicians is in our mutual best interest and we look forward to continuing to work with the music industry in this regard.

6511 Another issue that has been raised is third party access. Far from limiting access, we believe our service will be a catalyst for it. Our use of spectrum in the L-band does not impact any existing allotments. Moreover, our commitment to ensure that our receiver can receive free over the air DAB will provide a platform for new and existing digital radio services.

6512 M. PARISIEN: Lors de notre comparution, nous avons indiqué notre intention de faire une large place aux artistes de la relève ainsi qu'un inventaire musical beaucoup plus élevé que celui offert par les stations de radio commerciale privées de langue française, qui sont financées uniquement par des revenus publicitaires.

6513 Madame la vice-présidente Wylie nous a alors demandé si nous pouvions proposer une formule qui permette au Conseil et à l'industrie canadienne de la musique d'être rassurée quand à la mise en ouvre de nos intentions.

6514 Les grilles de programmation que nous allons déposer dans quelques semaines fourniront déjà une bonne indication des multiples créneaux qui sont réservés à la musique émergente comme aux artistes émergents dans tous les formats musicaux composant notre offre francophone.

6515 Je rappelle que, dans notre éventail de canaux, se trouvent des services comme Québec Rock et Francophone qui diffuseront tous les deux 100 pour cent de musique francophone ainsi qu'Émergence, qui sera 100 pour cent canadien.

6516 Pour alimenter de tels services nichés en contenu exclusivement canadien ou francophone 24 heures par jour et 365 jours par année, il faut une énorme quantité de pièces musicales différentes qui doivent être constamment renouvelées. Nous serons donc en recherche permanente de nouvelles pièces musicales de langue française dans tous les genres.

6517 Pour répondre plus concrètement à la préoccupation du Conseil, nous sommes prêts à prendre l'engagement additionnel suivant :

6518 CSRC s'engage à diffuser sur l'ensemble de ses services de langue française au moins 50 pour cent des pièces musicales de langue française contenues dans les nouveaux albums produits et mis en marché au Canada au cours des six derniers mois, sous réserve, évidemment, que celles-ci s'inscrivent dans des formats musicaux des services mis en ondes. Cela est un engagement sans précédent, que seule la radio par abonnement peut permettre, et qui ne peut s'appliquer qu'au marché de langue française qui est petit en taille mais extrêmement dynamique, et un preuve supplémentaire de notre volonté ferme et réfléchie d'accompagner et de stimuler le développer des talents canadiens.

6519 MR. SKI: A lot has been said over the last few days about balance. On balance we must consider what is more appropriate. The importation of 212 channels of foreign produced music based on a U.S. platform in exchange for nine channels of Canadian content or the licensing of a new Canadian service that will provide 100 Canadian produced channels and that uses a Canadian platform that is based on a world standard. Throughout the history of broadcasting, Canada has often been faced with new technologies that could impact our culture and, in each instance, 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.

6520 Mr. Chairman, Members of the Commission, CSRC is such a solution, our service will compliment, not compete with Canadian radio. Listeners who are passionate about their music will find a depth of choice and material on our channels that conventional radio cannot provide. With over 100 Canadian produced channels in English and French, for Aboriginal and Ethnic Canadians, for youth and seniors alike, CSRC will have something for everyone.

6521 Before concluding, we wanted to respond to a couple of questions that you asked yesterday and we had committed to get back to you on. The first was, how many of the channels would consist of rebroadcasts of existing Canadian radio stations? We are prepared to commit that for the English and French language channels none will be made up of rebroadcasts of existing radio stations in their entirety. Moreover, we will limit the amount of programming drawn from existing radio stations to 10 percent of all programming on these channels. However, with respect to the diversity stations, we do expect that some programming will come from existing licensees such as AVR, CHIN and Fairchild. And, in fact, entire channels may be rebroadcast. We view this as positive because it will allow listeners outside of the markets in which these stations are available to access this valuable programming. Moreover, this 10 percent of our channels will allow us to provide additional access to third parties such as multi-faith providers.

6522 The second question related to how we would define local programming for the purposes of a COL. As we explained, we may draw some of our programming from existing radio stations, however we have no intention of airing local surveillance information. Consequently, we are prepared to accept a COL prohibiting us from: one, broadcasting local surveillance information; and two, originating any programming designed specifically for a given market.

6523 That concludes our remarks. We welcome any questions.

6524 THE CHAIRPERSON: Thank you, I will start of with... a few of my colleagues may have some others. You started off, Mr. Switzer, so perhaps the question is best put to you. I assume that your reference to equitably licensed services would exclude the two other applicants in this proceeding if they were licensed on roughly the terms of their application?

6525 MR. SWITZER: As they have filed, yes, sir.

6526 THE CHAIRPERSON: So, in effect, that is how you arrived at your financials, based on being the sole licensee?

6527 MR. SWITZER: Correct.

6528 THE CHAIRPERSON: And really,... again, I think you said this yesterday, but just to confirm this, you said that were they licensed on those terms that you would probably in all likelihood not proceed. It think that that was the bottom line of that. Okay, so then the issue comes up of a monopoly and Mr. Miller said we don't want to be a monopoly. I think you also agreed and if it is not your position let me know that you would accept a BDU type licence... a distribution type licence, from a programming type licence. Is that still your position?

6529 MR. SWITZER: We filed as a programming undertaking, we certainly discussed yesterday our preference, we are not suggesting that if in the Commission's wisdom a BDU approach is part of a solution for us, but we would of course certainly look at it.

6530 THE CHAIRPERSON: Right. So then the issue of access of course comes up and I know you have partially addressed that in these remarks, but as the Commission experienced and continues to experience with DTH in terms of accessing by the large television groups in the country and trying to balance that, you can predict that there will be, among radio broadcasters I would have thought, an equal should... the system work, an equal desire to share in the benefits of the use of that spectrum. I mean, they do have the right currently to replace their analogue systems one by one, but in effect you would be taking up all the rest of the spectrum available. And the question is what realistic provisions would you be prepared to make in order to ensure that there is equitable treatment of existing, new, large, small, I mean, the whole...? In effect, if we don't solve these problems and deal with them upfront then we face the prospect of all the difficulties that we have been through on the DTH of various small, large, urban, rural, western, eastern, French, English, broadcasters seeking access to the very limited spectrum available on the DTH systems.

6531 So ,in effect, I am asking you to help us with that issue in support of your own application if we were to go that route.

6532 MR. SWITZER: Mr. Chair, it is obviously a very important question and perhaps I would like to begin, and others may want to join, and I think our first case would be, without taking up time, state that it is our preference and belief and that our response to the very well crafted call for subscription radio service is that we in the first instance should be treated as a programming service and that that issue doesn't exist. But we acknowledge it could be an issue should you go the other way.

6533 We obviously have done our best in terms of matters of diversity to discuss separately the ethnic services, the non-music based, non-talk ethnic services in terms of treating them, acknowledging in our comments to date and confirmed today that we do expect to work with other broadcasters. We have some sympathy, we have much sympathy for the interveners that have appeared today, particularly from community and campus radio. These are real issues. There are clearly issues that are important not only as we had talked about in previous days in commercial radio, but with campus and community radio as well.

6534 We have done our best to make a commitment in terms of the conditions of licence that we have crafted and to add words that it is our intent to help. Part of the advantage, and I am not trying to blow it but I think it is worthy of mention, is that because we are in effect... perhaps subsidizing is too big a word, but assisting the growth of DAB across the country in smaller markets, every radio that is purchased for this subscription service will automatically be able to receive local market DAB. There may be opportunities for multiplexing in the future, to assist those channels further. We think one of the huge advantages is to make available at lower cost a larger base of receivers that can receive smaller market DAB and that that is a unquantified advantage or contribution if you will to the system that we think is an important part of trying to do the right thing.

6535 We were pleased that the interveners today... and almost all were positive or certainly neutral... acknowledged our response to them in phone calls, in meetings and in letters. Almost without exception through the day they said that we were understanding of the importance of the issue and doing our best as two experienced broadcasters to legitimately address their concerns and to acknowledge that there may be some issues.

6536 MR. MILLER: Mr. Chair, if I can add... First of all, there is a premise that "we use up" all the spectrum that we don't accept. To be frank, the call as we understood it as for subscription radio programming undertaking. As you know well, at the time of the call there was a general belief that only the satellite approaches were the way to provide that service. We came to the table with an innovative new way to approach it and Industry Canada made spectrum available.

6537 I am not aware of Industry Canada ever indicating that there is absolutely no spectrum available for other services. I think what they attempted to do is to assure you that the three applicants before you had suitable spectrum for their service. So, number one, the premise that we use up all the spectrum, we don't accept and we don't accept both because what Industry Canada was able to do was find spectrum outside the traditional DAB allotment and a little bit of unused within that allotment. The remaining amount of allotment is still a massive amount of spectrum and there is other spectrum for other services. We talked or alluded to the licensees that have been allotted 100 megahertz of spectrum, that is an order of magnitude more than we have for, first of all, existing services like MMDS. And others will correct my terminology, but there is another 100 megahertz of spectrum which Microcell had that now Rogers has which was I think designed to the north and can be used for other purposes.

6538 So there is a remarkable amount of spectrum out there. What we have tried to do is respond to your call and provide a programming undertaking service that responds to if you will what we believe to be the most important public policy considerations. And to give you some comfort on access, because we recognize it is an important thing, indicate how we believe we can provide access. Ultimately, we don't think we will be the only Canadian service provider. If you licence us we believe you say yes to Canada, you say yes to Canadian services and technology will allow others. And that is why we are concerned about you suggesting we should be a BDU. We are programmers, we don't want to be cable companies or DTH companies. We wan to provide a service, but give you the assurance that there will be opportunities for access within our service and opportunities for other services in the future.

6539 MR. SWITZER: Mr. Chair, could Duff Roman add a little bit? This has been his life for about 20 years.

6540 MR. ROMAN: Well, I hope I don't have to get a second life is my hope. Mr. Chairman, just to put this on the record so there is clarity, currently under the Canadian allotment plan there are five services for 1.5 megahertz of spectrum. With our plan we are taking that to 16 to... to 17 services for 1.5 megahertz. You are with me, I know.

6541 What I would like to say is that there is lots of spectrum. It is a matter of bit rates. The same receiver will pick-up the lower bit rate as the wider bit rate, so there is lots of spectrum. We are operating it up to 224 kilobits and our service is going to average about 64 kilobits, so there is a surplus.

6542 THE CHAIRPERSON: Thank you, and those are good points, Mr. Miller, to the extent that there is more spectrum and that one could see a competing service to that extent. That concern is partly alleviated. On the other hand, we have two satellite systems up there and the way DTH has evolved and it doesn't necessarily have to be in the model here, but the way it has evolved over the years, evolved a model that highlights equitable distribution among broadcasting entities in the television area. And I guess that is one option that the Commission could choose, whether there was one licensee or, as you pointed out the possibility of, say two licensees with multi-channel systems. The issue might be alleviated somewhat, certainly from the monopoly point of view, but from the point of view following a pattern of equitable distribution, you may be still facing the same issue. And, you know, it never have been definitively resolved, the phrase equitable distribution remains and it is left to the parties to kind of sort that out proceeding after proceeding. That is one model for dealing with this access. And I do appreciate that your receiver will accommodate the local DAB licensee, so in that sense they can rollout and grab some more easily. So, thank you for that.

6543 Those are my questions. Commissioner Langford.

6544 COMMISIONER LANGFORD: Thank you, Mr. Chairman. I assume at least some of you were in the room for today's interveners, perhaps all of you. I look out occasionally but I also try to follow what is going on. I did see some of you here.

6545 The reason I ask is another issue came up and I want to just ramble a bit on an introduction, because I don't want to appear to be critical here because I don't think any of the interveners were critical and I only want to bring their message to you. And I think what a lot of the independent artists, representatives of artists, people who managed artists... we heard them today. One gentleman was here with a portfolio of 18,000 independent artists and a petition from 3,000. What they were saying was that, I think if I can paraphrase it, is that the 35 percent CanCon limit has been a wonderful thing and our conventional commercial stations have done wonderful things with it for Canadian performers.

6546 But unfortunately, because you are commercial and you are trying to make the biggest impact you can, that hasn't impacted on all Canadian performers and a lot, and we heard numbers as high as 90 percent and over, feel left out, they just can't get on. And what is not clear to me -- and if you have covered this thoroughly in your application I apologize, but it has been a long week for all of us -- what is not clear to me is whether there is some way to rectify this in this new model, not going back and changing what CHUM does and Astral does with their conventional, but what can you say to these independent performers, all of whom I felt were ferociously patriotic Canadians, wanted to stay in Canada, didn't want to go to Nashville, but feel right now the best thing that has ever happened to them is the few plays they are getting on the U.S. XM and the U.S. SIRIUS. They are just not getting any at home.

6547 So with your expanded network now covering 75 per cent of the Canadian population, what comfort can you give to these independent entertainers, in the sense that it won't be the same 12 songs being played the same -- you heard it all today if you were here. It is always the same to entertainers. You are meeting the 35. Nobody argues that the people you are spinning aren't Canadian, but they are not getting on.

6548 Are you going to take a new approach with this whole new approach to radio?

6549 MR. SKI: Commissioner Langford, that is exactly right. We did a number of what we might call exit interviews with some of those people and I think what we have to be careful of here is comparing conventional radio today to satellite and then not taking that a step forward into what we are proposing.

6550 Because, in effect, you are right, there hasn't been that type of airplay on conventional radio, and there is a reason for that. In a competitive environment in many of our markets those stations, in order to attract a sufficient audience, in order to be successful and service the community, have had to be much more mainstream. But what we are talking about here is 100 new channels -- 100 new channels. So, in effect, these particular new channels will be serving various genres.

6551 I think as I mentioned yesterday, to simplify it, these are not only niche formats because in some larger markets you have niche formats, but here we will have niches of niches. And it is easy to do that because, again, it is subscription so we are able to offer these kinds of services.

6552 The very nature of the services themselves, though, is that they will be deep in terms of the music base. There is no benefit to us with a subscription radio service of duplicating what is currently on the air in any of the markets, because those listeners can get that service for free. So why would they tune into the satellite service or to our particular service in order to get that? They can get that for free.

6553 So we have to be vastly different, and this is where we have the opportunity to have these various genres which go deeper into the music than we can on any particular mainstream station.

6554 COMMISSIONER LANGFORD: I follow you, but if I look at something like jazz and blues and I look at your blues channel where you are talking about a 10 per cent Canadian content, you wouldn't need too many spins of Canadian blues players before you could move on to -- I'm going to date myself on this one, but -- Sonny Terry and Brownie McGee all the time or whatever.

6555 I take what you are saying, I take your good faith, and I know if I give Fred Sherratt just one more opportunity he will remind me that you guys always do what you say you will do and you always exceed expectations and I take that as well.

6556 At the same time, we have people here who really are frustrated, who really are feeling the pain of being excluded and I just wonder whether with all of this new programming and still looking at numbers like 35, 35, whatever -- even though I take your point they are well above what the opposition is offering -- still you have a tried and true formula for filling 35 per cent and I wonder what comfort you can give these intervenors that you are going to try a new route?

6557 MR. SKI: As I said, and you picked one of the ones at the lower end of the scale at 10 per cent and there are some that are obviously at 100 per cent, some at 45 per cent.

6558 COMMISSIONER LANGFORD: I picked a lot of averages mentioning the 35 too. There are a lot of 35s there.

6559 MR. SKI: Exactly. But again, in a channel such as the Blues Channel, it is availability of product in those, and remember, this is going to be a niche format. So we want to make sure that obviously people listen to this channel too, and I think given the availability of product we don't want to have a repeat factor that is obviously too high. If we do, then people won't listen to the channel. Again, 10 per cent is a minimum.

6560 But on all of these channels we are offering -- again looking at the alternative classics and punk and some of these other channels, we are still offering more than we would in a current radio environment.

6561 Jacques or Denis may wish to add something to that with relationship to the Francophone service.

6562 M. PARISIEN : Tel que mentionné précédemment, du côté francophone, la proposition que nous avons déposée, c'est de jouer, pour l'ensemble des services de langue française, 50 pour cent de toutes les pièces musicales qui seront produites dans le marché dans les six mois précédent la mise en ondes.

6563 Donc c'est considérable, parce que vous avez entendu ce matin plusieurs artistes. Vous avez entendu l'ADISQ venir dire que, dans une année courante, sur le marché francophone, il se produisait environ 2 000 pièces, et que les radios commerciales n'en jouaient pas plus qu'une centaine.

6564 That is about only 5 per cent of what is released and what we are committing to is 50 per cent, which is 10 times more. It is a small market, it is a dynamic market, there is a lot of production, but still you need a minimum quality to do a good product.

6565 I think as far as this proposition goes, it is a very positive and very major constructive proposition.

6566 COMMISSIONER LANGFORD: Thank you. I have brought their message to you again and we will consider your reply. Thank you.

6567 THE CHAIRPERSON: Thank you.

6568 Vice-Chair Wylie.

6569 COMMISSIONER WYLIE: This commitment you are making, it is only for the Francophone channels.

6570 M. PARISIEN: Oui. C'est pour l'ensemble des services francophones.

6571 COMMISSIONER WYLIE: You haven't found any need to have the same level of comfort for diversity in the English-language services?

6572 MR. MILLER: We haven't --

6573 COMMISSIONER WYLIE: For example, if I look at the bottom, what is called the "Independent Music Channel" 100 per cent -- which is not yellow so obviously it will be English language -- how do we know whether -- you have heard the intervenors talk about first tier, second tier and third tier Indie?

6574 MR. MILLER: Again, in respect of that channel we have said it is for unsigned artists, so it will be 100 per cent of the kinds of artists that are saying that they don't get airplay.

6575 COMMISSIONER WYLIE: And the criterion will be?

6576 MR. MILLER: Unsigned.

6577 COMMISSIONER WYLIE: Unsigned.

6578 MR. MILLER: Can I put this in perspective?

6579 We have heard a lot of interest from Canadian independent artists in U.S. services which apparently have on the level of 2 to 3 per cent Canadian content, maybe 5 per cent. That is what we have been told. Imagine the exposure we can give these people with a service that meets 35 per cent Cancon levels.

6580 We are talking about a vastly different quality of exposure on ability to expose Canadian artists. So if market forces in the U.S. have permitted the level of exposure that Canadian independent artists have got excited about, when we magnify that by almost sixfold there can only be mathematically vastly more exposure and that is what we are relying on.

6581 COMMISSIONER WYLIE: Basing ourselves on the fact that the channel is programming all day.

6582 At the end of the day what we have before us are two conventional broadcasters that are very large, radio providers, and intervenors who say, "Well, it will be same old, same old." You are the ones who are doing the same old, so what are the level of comfort that in each of these channels there will actually be that level of diversity, is the question.

6583 In some cases it is obvious. If it is 100 per cent more likely you will have everything in there but -- don't look so concerned.

6584 We have asked in French, give me some assurance that I can tell Solange Drouin they mean it. So if I understand it, Mr. Parisien tells me that 50 per cent of the product will have been released in the last six months. Correct?

6585 MR. PARISIEN: Right.

6586 COMMISSIONER WYLIE: So that is a quantifiable number or criterion that is not to difficult for us to bind you to -- I assume you would accept that -- and to measure and therefore it is a certain level of comfort, because normally when we say 35 per cent Canadian most broadcasters have done what they were supposed to.

6587 I am just asking you: Where is the level of comfort in the English-language services?

6588 MR. SWITZER: Madam Vice-Chair, perhaps I will begin.

6589 The area where we saw perhaps the most need that we heard from today, intervenors with the most passion -- although it is clearly a legitimate issue across other genres -- was in the independent area. Particularly it was discussed with either signed but not broadly released or thousands, tens of thousands, 18,000 of 24,000 unsigned artists in the independent area.

6590 We have come forward in our application, confirmed in our presentation and discussed today for example, although only one channel, in the area where we saw the most need to say this channel can meet a need, it will be 100 per cent Canadian, our independent music channel, and it will be exclusively all the time, night and day, played only from artists that are unsigned. We felt --

6591 COMMISSIONER WYLIE: That is not the channel that would raise the level of difficulty. It would be more, as Commissioner Langford alluded to, the Jazz Channel, the Dance Channel, the others. Of course you will focus on the independent one, it's easy. What is the whole -- I have a certain comfort, or certainly better than yesterday, that in French there will be a commitment that is measurable to new artists.

6592 This is your choice.

6593 MR. SWITZER: No, no, it is --

6594 COMMISSIONER WYLIE:  -- independent music channel is easy to understand.

6595 MR. SWITZER: We are not trying to in any way get out of responsibility in doing everything we possibly can. This is an area where we believed there was the most need. This is an area where perhaps the out of balance between supply and demand was the greatest. We don't see the same -- there is obviously talent in Canada in many genres, but this was the area where singlehandedly there was more supply than existing demand in commercial radio on the English side. That, together with commitments we have made in all these other genres, we believe are very appropriate and serious.

6596 MR. SKI: I think, too, Madam Vice-Chair, when we talk about 35 per cent on these channels we have to keep in mind too that we are a minimum of 35 per cent there are no commercials on these particular channels, so automatically the level of Canadian content is higher. In other words, more will be played --

6597 COMMISSIONER WYLIE: I'm not talking about Canadian content, I am talking about the kind of Canadian content. Is it going to be responsive to the passionate interventions we have had about not redoing what is available now from conventional broadcasters. That is what you do best, isn't it? So show me you can do something else.

6598 MR. SWITZER: Madam Vice-Chair, we learned a lesson, if I may be -- I don't want to speak on behalf of the industry in terms of what did not work in the launch of DAB in Canada in the past few years, and that was repetition of the product that is already on the air.

6599 We want to do good and put Canadian music and Canadian artists in front of Canadian subscription customers, but we are also business people. It is in our best business interest to put differentiated product -- we have learned from the history of the recent DAB experience in Canada and we wish this to be a success.

6600 MR. ROMAN: Could I add something, Madam Vice-Chair?

6601 Believe it or not, I had another life before digital radio and it was in programming and I would like to make a comment on what Paul was saying, and that is non-commercial radio as opposed to commercial radio.

6602 Just doing a little math here, we are basically taking the unit count per hour up to a much higher level. We are probably adding another 25 per cent of music. What that means is, we might be playing 15 or more selections per hour, so we are looking at a playlist over the week of maybe 2,800-2,900 songs. So 10 per cent of that would get you up close to 300 individual spins. That is a lot of product.

6603 Since this is a niche format, we are not taking a commercial radio approach. We don't want tight hot rotations. The playlist has to be long and extended. We have to go deep with it.

6604 The next part is that blues format is not considered a commercial popular format. We have to take an entirely different -- by definition the blues format means that we will be playing music unlike the kinds of music we would play on our normal over-the-air radio stations. The format itself drives us into that diversity.

6605 M. ROZON: Madame la vice-présidente, il y a une différence, je pense que vous le savez fort bien, entre le marché du Québec et le marché anglophone, et je pense que, dans cette offre-ci, ce qui va se produire au niveau anglophone c'est qu'il va y avoir tellement de nouveaux genres et sous-genres qui n'existent pas actuellement qu'il va faire en sorte que des artistes qui n'ont jamais été joués font jouer systématiquement. C'est quelque chose d'incomparable qui va se produire dans le marché anglophone au Canada. Et si on parle de lancements, 35 nouveaux genres et sous-genres, à 35 pour cent de contenu canadien, ça n'a rien à voir avec 60 pour cent ou 80 pour cent de contenu canadien dans deux canaux qui vont tout mélanger les genres.

6606 COMMISSIONER WYLIE: Thank you very much. We have to draw some of those things.

6607 We have l'ADISQ before us who talks about 2,000, 300.

6608 THE CHAIRPERSON: Commissioner Langford?

6609 COMMISSIONER LANGFORD: I am listening with interest at the capacity for helping these people, but what I'm not hearing is anything more than: Well, we would be unwise not to do it. I agree, it would be.

6610 But I'm not hearing from experienced programmers that when we get it up to that 300 number that Mr. Roman was talking about, that we are going to reach into the lost 18,000-24,000, that we are going to do it, and that I would wonder how you would react, for example if -- this process is now over, we have a very complete record -- if based on that record we were to come up with an expectation and attach it to a licence.

6611 I would like to hear from, or I would expect to hear from you, that you would have some sort of reaction to that. I don't know what it would be, but it seems to me that we have made ourselves clear and what we are saying is that we have heard this demand and it seems, on the face of it, legitimate.

6612 Now, it is quite possible that we will go back and with the benefit of staff and time and reflection perhaps see it in a different way, but as of now I am surprised that we are not hearing anything but, oh, we would be foolish to do it any other way, and that sort of thing.

6613 How would you react to us saying we expect something concrete here?

6614 MR. MILLER: Commissioner Langford, you have asked us, or the Commission has asked us to come back with some sample program schedules and in providing those program schedules this is something we will look at. We weren't expecting obviously this question on the English side so we apologize that we don't have a specific proposal for you right now, but in going through that analysis of providing of program schedules we will look at that. And should you choose to come up with a number, then obviously we will address that when it comes up.

6615 COMMISSIONER LANGFORD: We asked you a question yesterday and your coverage went up 50 per cent; we have asked you a question today, we are willing to wait for your proposed schedules. We wait, as Shakespeare would say with what, bated breath and whispering humbleness.

6616 Thank you very much.

6617 THE CHAIRPERSON: Thank you.

6618 Counsel?

6619 MR. WILSON: Just one question. Just to circle back to an area that we covered yesterday with respect to the French-language services, in the discussion yesterday the two channels, Palmares and Emergence, I think you mentioned that those would be 50 per cent French-language vocal selections. I'm just wondering if you could sort of give us some comment on what the impact would be were the Commission to require those to be 65 per cent French-Language selections?

6620 M. ROZON : Encore une fois, la raison pour laquelle nous proposons ce niveau-là, c'est qu'on veut offrir une programmation diversifiée, pouvoir justement éviter de reproduire ce qui existe dans la radio commerciale. Ce qui arrive, c'est que le nombre de pièces musicales qui sont attrayantes, de langue française, dans la plupart des formats de musique émergente, comme le Hip Hop ou le Rap -- parce qu'il faut comprendre, Émergence, on a dit 100 pour cent canadien, mais c'est dans des formats qui n'existent pas actuellement -- c'est 100 pour cent canadien dans des formats comme le Hip Hop, le R&B, le Rock alternatif. Oui, il va y avoir un peu de Pop Rock, mais on ne veut pas que ça ne soit que ça.

6621 Donc ce n'est pas suffisant, l'offre qui existe dans ces formats-là, pour permettre à un service spécialisé de ce type de musique d'offrir une offre attrayante aux jeunes auditeurs, avec une obligation de 65 pour cent de musique vocale de langue française.

6622 C'est la même raison pour laquelle, finalement, ça ne s'offre pas présentement dans la radio commerciale.

6623 Alors nous nous engageons à respecter la règle de 65 pour cent sur l'ensemble des services et non individuellement. Nous pourrons créer un service comme Émergence qui se consacrera exclusivement à la musique émergente canadienne, 100 pour cent de contenu canadien, dont le contenu francophone sera de 50 pour cent.

6624 Et puisque nous aurons d'autres services comme Québec Rock qui, lui, sera exclusivement dédié à 100 pour cent à du contenu francophone, il en résultera, je pense, une plus grande diversité de formats musicaux, et ce sera bénéfique tant pour les auditeurs que pour les artistes, en plus de ce à quoi qu'on vient de se commettre également.

6625 MR. WILSON: I have no further questions, Mr. Chairman.

6626 THE CHAIRPERSON: Thank you.

6627 A final word over to you.

6628 MR. SWITZER: Very briefly, Mr. Chair. It is an opportunity to thank not only Industry Canada for their help and support through this process, not only you Mr. Chair, Madam Vice-Chair and Commissioners for a very full and complete discussion of these very important items, but to thank staff as well for their constructive input and feedback through this process. We thank you.

6629 MR. GREENBERG: If I can add one word, Mr. Chair, is that we have tried as two Canadian companies to rise to the challenge, to find a Canadian solution to new technology and one that could offer Canadians excellent product, excellent service in both official languages and hopefully we have given you something that will answer those needs.

6630 THE CHAIRPERSON: Thank you very much.

6631 Mr. Secretary.

6632 THE SECRETARY: Thank you, Mr. Chairman. I will now ask the Canadian Broadcasting Corporation and SIRIUS Canada to respond to the intervention at this time.

--- Pause

REPLY / RÉPLIQUE

6633 MR. SHEA: Good afternoon, Mr. Chairman, Members of the Commission. I will quickly reintroduce our panel for the benefit of the translator.

6634 My name is Kevin Shea; to my left is Gary Slaight; and to Gary's left is Andreanne Sasseville. To my right is Michel Tremblay; to Michel's right is Grant Buchanan; and beside Grant is John Lewis.

6635 Before providing our reply to the interventions, I would like to call upon Grant Buchanan to address a number of follow-up first that arose from our earlier appearance before the Commission where we undertook to get back to you on a number of items.

6636 So we will start with that, if that is okay.

6637 MR. BUCHANAN: Thank you.

6638 We are pleased to respond to those questions and have filed a package of documents which you should have in front of you and to which I will refer.

6639 They include a new draft of proposed conditions of license, which are found at pages 2 through 4.

6640 Let me start with a few housekeeping matters.

6641 You asked for a print copy of the various charts that were presented on the easel, so you will see at pages 5, 6 and 7 a copy of the proposed programming schedules for Radio 3, Bandeapart and The Wave. These are illustrative only, but they will give you a good idea of what is planned for those channels.

6642 You also asked for a copy of the chart that Mr. Lewis took us through on Tuesday regarding the authorization process for Canadian accounts. That has been provided on page 8.

6643 You asked for a list of the U.S. channels currently offered by SIRIUS. This has been provided on page 9. As discussed, this lists some 120 channels that are offered at this time. Certain of those channels will be dropped if the SIRIUS Canada application is approved, since room will need to be found for the five Canadian channels at the time of launch. There may also be other changes to the U.S. line-up prior to the SIRIUS Canada launch.

6644 And, if as is expected, three more Canadian channels can be added once the 300,000 subscriber threshold is reached, this will also require the dropping of some U.S. services. So the U.S. list is subject to amendment.

6645 That being said, it is expected that SIRIUS Canada will want to include as many of the U.S. channels as possible as part of the Canadian service, subject to clearance of rights and the approval of the SIRIUS Canada Board for each channel. Condition of License No.1 would permit us to do so.

6646 Next, you asked us to provide the estimated programming costs to be incurred by the CBC and by Standard Radio with respect to the five channels that they will be providing or assembling. Those figures are provided on page 10 in the package.

6647 You asked us for the projected average subscriber numbers for SIRIUS Canada for each year of the license term. Those figures are provided on page 11.

6648 You asked us to provide an estimate of the incremental costs SIRIUS Canada would incur in complying with Annex A of Industry Canada's letter of 14 September 2004. We are informed that there are no incremental costs. The costs of complying with the engineering standards set out in that letter were anticipated and have already been factored into our capital costs.

6649 Finally, you asked us to provide a breakdown, in confidence, of the Cost of Goods Sold line in the SIRIUS Canada financial projections. That breakdown was supposed to have been supplied in confidence today to the Hearing Secretary. I have just learned that it was not provided as it was supposed to have been and we will supply it in the morning, if that is acceptable to you.

6650 Now, I want to discuss some of the points raised in those revised conditions of license.

6651 First, we agreed that no less than 70 per cent of the programming on Bandeapart would be original material. You will see that is now reflected in license condition No. 4(d).

6652 Second, you asked us to consider what would be the appropriate ratio between French and English-language programming services among the Canadian channels.

6653 We think that a ratio of 25 per cent of the Canadian channels is probably the right minimum number. That being said, two out of five Canadian channels at launch, or 40 per cent, will be French-language channels and, as Mr. Slaight indicated to you, if, as we hope and expect, three more Canadian channels are added to the offering over the license term, the first of these channels will also be a French-language channel. That commitment is now reflected in proposed license condition No. 3(a).

6654 Third, on a related point, we undertook to ensure that at least 50 per cent of our Canadian talent expenditures, apart from aboriginal initiatives, would be directed to the support of Francophone musical artists or to the support of musical institutions in Quebec. That is now reflected in licence condition No. 11. This is a major contribution to address the needs of the Francophone musical community.

6655 You asked us to consider a possible ratio of Canadian to non-Canadian channels in respect of future channel growth due to compression advances. As you know, SIRIUS Canada has an undertaking from our U.S. partner for five Canadian channels at launch and that they will negotiate in good faith to provide three more bandwidth for Canadian channels if and when the subscriber numbers reach 300,000 in Canada.

6656 SIRIUS Canada now has had a further discussion with its U.S. partner. SIRIUS has committed that if compression technology makes it possible for them to materially exceed the current 120 channels, then SIRIUS has also indicated that it will negotiate in good faith to add additional bandwidth for Canadian channels. We did not, however, agree on a formula.

6657 You also asked us who would program a Canadian channel if there are more than eight on SIRIUS Canada.

6658 As you know, the current deal contemplates that CBC will produce the first four and Standard the next four. To be honest, the parties have not agreed on who will program the ninth or additional Canadian channels if these become possible. If and when this comes up, the SIRIUS Canada Board will meet to make that determination and would then go back to the Commission for approval. So that is how we propose to handle that question.

6659 You also asked SIRIUS Canada to consider whether it could make a firm commitment of its proposed Canadian talent development monies, not only for years one and two, which are guaranteed, but also for years three to seven.

6660 SIRIUS Canada has committed to spend at least 5 per cent of its revenues on CTD over the license term, but really cannot guarantee specific amounts after year two. This is a very costly and risky enterprise and there are many unknown costs -- particularly in the copyright area -- that cannot be predicted with certainty. The existing commitments are significant and meaningful, but SIRIUS is not able to guarantee specific amounts after year two, as opposed to the overall percentage of revenue which has been committed to under condition No. 9.

6661 Finally, you asked us to consider whether SIRIUS Canada could keep logger tapes of some of the channel in addition to the music playlist we propose to maintain for the Canadian channels. We have looked at this issue, and we would propose the following: First, we would keep logger tapes for the Canadian channels offered, other than CBC One and La Première Chaîne, which already keep their own logs. Second, in regard to the non-Canadian channels, we propose that the SIRIUS Canada Board of Directors review those channels from time to time and determine which channels are likely to be controversial or the subject of complaints for an acceptable contents. Logger tapes would be kept for those channels until the Board decided that they were no longer necessary given the lack of complaints; and this is reflected in condition number 16.

6662 All of these regulatory commitments are made on the condition that equivalent and comparable obligations would be imposed on any other satellite radio operator licensed by the Commission. That, Mr. Chair, completes the list of deliverables that we have undertaken to provide to you today, and we would be pleased to answer any questions you might have about those documents.

6663 I do want to briefly address a few documents that are going to need to be filed later, the one we mentioned a moment ago, the Cost of Goods Sold. We also have a few amendments to existing agreements that we spoke of when we appeared the last time, as well as a new agreement to reflect the new authorization approach, the Cape Breton call centre that we saw on the chart, as well as the licensing agreements was standard for the fifth channel.

6664 As we complete these documents, we proposed to file them with the Commission, so you'll have a complete picture of the relationship. All of these documents would be consistent with the undertakings we have given during the course of the hearing.

6665 M. SHEA: Thank you Grant.

6666 I will now proceed with our reply to interventions.

6667 First, I would like to thank the Commission and staff for its efforts in this process. Combined policy and licensing hearings present a unique challenge, and we appreciate your attention and we look forward to your determinations.

6668 I would also like to thank the hundreds of positive interveners who took the trouble to make their views known. We also owe a particular note of thanks to the people who came here today and yesterday: Mr. Audet, Jayne Courtney, Laurie Januska, Tom Tompkins and, of course, the Goods, father and son, who made the effort to come and exchange their views with you. They are right when they say that satellite radio will provide an exciting new entertainment medium which will enhance both the breadth of selection and the geographic coverage beyond existing boundaries.

6669 A number of industry groups also appeared and raised certain issues with you. We believe that our reply to interventions on September 15th adequately dealt with most of those concerns, but I'd like to leave you with the following comments.

6670 We think that a satellite audio BDU license with Canadian Programming Services regulated by way of conditions of license is the preferable method of dealing with satellite radio. Our proposed conditions of license are simple, straightforward and customized to our circumstances. So we think that is the best approach to take.

6671 We appreciate that a number of interveners have asked for a higher number of Canadian channels, a higher number of francophone channels, and a higher dollar commitment to Canadian talent development.

6672 We are very sympathetic to these concerns are we have also sought to get the highest commitment in these areas that we could make. But it must be remembered that this technology involves a North American platform, and there is a limit to just how much we can get. Right now, Canada represents zero per cent of the subscriber base of the combined Canadian and U.S. markets. And a 100 per cent of the channel capacity on the satellites is currently spoken for. The minute we launch, we take up five channels. As we grow, we expert to reach eight channels. And more Canadian channels can be added as capacity allows, and more important there are subscriber base increases as well as compression improves.

6673 The suggestion that we can afford to make a CTD expenditure above 5 per cent is also unrealistic. The suggestion from CHUM/Astral that we should put 35 per cent of our revenues into a CTD expenditure is simply impossible and unrealistic with this type of business plan.

6674 There's ample commission precedent for the 5 per cent level we are proposed and we have stepped up to the plate in year one and year two to ensure that there is meaningful support for Canadian talent right at the outset.

6675 Now in that connection, I'm going to call upon Michel Tremblay, who will discuss what we think is the key difference between the satellite radio proposals and the CHUM/Astral proposal that relates to our commitments.

6676 M. TREMBLAY: Thank you Kevin.

6677 Mr. President, Members of the Commission, it is abundantly clear that the CHUM/Astral's proposal has a launch schedule that is indefinite and even by the end of seven years will only serve a limited number of urban markets.

6678 As per CHUM/Astral application, even by the end of their first license period, at least 40 per cent of the population will not have access to their signals. And where is that unserved population located? It is in the hundreds of smaller communities across Canada where radio service has long been scarce.

In other words, CHUM/Astral are primarily targeting the urban markets that already have a rich selection of radio signals.

6679 CHUM talked about the importance of certain principles but one that they omitted was perhaps the most important, namely the preoccupation in the Broadcasting Act to get service to Canada's remote and underserved areas. That is where the CHUM/Astral proposal is deficient and that is where the SIRIUS Canada proposal is strong.

6680 Some have asked: Why is the CBC involved? First, we must be present on this emerging platform to reach Canadians. This is no different than when we were among the first broadcasters who embraced the Internet delivery of its service ten years ago. Secondly, satellite radio is a very cost-effective way of reaching those remaining Canadians that are outside the contour of our radio transmitters. It is also a cost-effective platform for our two new youth oriented services. Thirdly, this is obviously a unique opportunity to extend the reach of our service in the U.S. market and provide exposure to both Canadian values and creative talent. In our view, these are compelling reasons.

6681 CHUM and Astral are saying that if we and CSR are licensed, they will not proceed with their service into a few large urban markets. So they are saying, for that reason, the Commission should not license satellite radio.

6682 But to this we have two simple questions. First, what does the Commission say, then, to the residents of Swift Current and Hastings and to the 13 million Canadians that want access to multichannel subscription radio service but will never be served by CHUM/Astral's proposal? Second, what does the Commission say to the hundreds of Canadian musical artists who desperately want access to the U.S. radio market to expand their career opportunities but will be shut out by the CHUM/Astral's proposal?

6683 We appreciate that we are dealing with an extremely different kind of radio service, one that combines Canadian-style regulation with a North American platform. That does create unique licensing problems. But it is no answer to adopt CHUM/Astral's approach of stopping it completely or trying to fetter it with conditions that make it impractical.

6684 Rather, we should recognize the unique attributes of this platform and harness its extraordinary potential so that Canadians get a fair share of the benefits. That is what we propose.

6685 I will now ask Gary Slaight to address other issues raised by interveners.

6686 MR. SLAIGHT: Merci, Michel.

6687 Let me first address the concern raised by several conventional radio broadcasters relating to the potential for satellite radio to carry commercials or to carry local news, traffic and weather. That concern is entirely addressed in our proposed license conditions. Other than some local programming that is already on the two existing CBC channels that SIRIUS Canada will carry, there will be no local programming on any Canadian programming service.

6688 As well, there will be no advertising on any of the new channels that will result from the licensing of SIRIUS Canada. SIRIUS Canada will not solicit nor accept any advertising.

6689 Next, I would like to stress that there is no evidence of impact on local radio broadcasters. Neither the CAB nor any commercial radio broadcaster actually intervened to make that point.

6690 Now, let me talk about the music. I have a well-known passion for Canadian music. That is why I am being inducted, God forbid, into the Canadian Music Hall of Fame along with Gordon Lightfoot and my friend Brian Robertson who was before you today.

6691 Canadian artists benefit from a number of support systems in Canada such as airplay, government funding, F ACTOR and other initiatives.

6692 The window to the U.S., as you heard first hand from Bruce and Travis Good, is the next necessary step. Let me read from the intervention of the well-known Donald K. Tarlton, the Chairman of Donald K. Donald Entertainment and, I might add, a member of CIRPA:

"It is important that companies willing to offer new platforms for the exposure of Canadian music be permitted to try to develop and execute their plans with those exciting new mediums. I also support this application as I believe services like these can be used strategically by Canadian music entrepreneurs and artists to develop international opportunities especially in the lucrative USA market" (As read)

F ACTOR itself, in its 2003-2004 Annual Report, said the following:

"[_] one needs only to look around and realize how important long range planning of a global nature is required when signing a new act. It's next to impossible for an artist to have a financially viable career without going into the international arena." (As read)

6693 MR. SHEAL: Thank you, Gary.

6694 In conclusion, I want to highlight the many positive attributes of satellite radio that were noted by interveners. Some of these include,

-guaranteed U.S. distribution of Canadian signals, including CBC's core services;

-guaranteed exposure on U.S. services of Canadian talent;

-complete Canadian geographic coverage;

-an estimated $22 million in CTD benefits; and, less we forget,

-delivery of a valued mobile service to Canadian consumers everywhere they travel.

6695 This is a service that will be available through equipment that is already being installed in vehicles by all of the world's leading auto manufacturers. We believe strongly that Canada should jump on this bandwagon now and harness its power for the benefit of Canadian consumers and artists.

6696 We also ask you to think well beyond our five channels, because we believe that once our CTD benefits begin, once Andreanne is in place at SIRIUS in New York, the 64 channels of music at SIRIUS will now be playing a much wider and deeper schedule of Canadian artists because of us bringing to the attention of the 64 programmers at SIRIUS the benefits and tapes and the messages of those that you heard before you today.

6697 We thank you very much and we would be pleased to answer any questions that you might have.

6698 THE CHAIRPERSON: Thank you.

6699 Just a few numerical questions following from what you filed today. In your projection of subscribers, the ratios between OEM and after market, how were those derived?

6700 MR. LEWIS: The ratios, they were independently driven. So we went through and assessed, as I mentioned to you earlier in the session, what an appropriate OEM subscriber level would be by going auto manufacturer by auto manufacturer looking at the number of vehicles and so on. So it was a bottom-up exercice.

6701 THE CHAIRPERSON: Bottom-up per year. That's were the ratios don't quite work out to 60-40.

6702 MR. LEWIS: Exactly. Yes. Different vehicles are coming out at different years and so on.

6703 THE CHAIRPERSON: And on the other chart, page 10 I guess it is, those are in effect notional figures. The standard figures are very round, and that's approximately what the cost, Mr. Slaight, you envisaged you'll incur per year on those, and CBC seem to be more precise, but is it anymore precise than that? How are you costing those out for the CBC?

6704 MR. LEWIS: For the CBC? For the CBC, again, it was done as a bottom-up exercise. We looked at four principle elements, the programming cost, and we went Radio 3 and looked at they are currently doing, looked at what would be required and in fact found that, from a programming production perspective, they had sufficient resource to do that. We then looked at the Bandapart. They were not as well financed with their Web process, so they did need a little bit of increased resource in order to be able to get the programming elements done. We then looked at the rights costs and assessed the rights costs looking at our talent agreements and so one. Once we established the rights costs, we then looked at wire services. Wire services, again, are different from each of the language groups in that they partner with different providers. And then the distribution costs are getting the signal, one from Vancouver, as Jane Chalmers mentioned, and from Montreal and Toronto down to New York, added them all up, and those are the figures you have.

6705 MR. TREMBLAY: If I may, Mr. Chair, as a reflection of the discussion with Jane Chalmers and Sylvain Lafrance, those represent only the incremental costs attached to this project.

6706 Obviously, those credit platforms have been in existence for a number of years and these are the additional costs triggered by the distribution of the North American platform.

6707 THE CHAIRPERSON: Thank you. And they include the rights payments--

6708 MR. TREMBLAY: Correct.

6709 THE CHAIRPERSON:  --because they are, in effect, FOB to you and to SIRIUS Canada, I assume--

6710 MR. SHEA: That is correct.

6711 THE CHAIRPERSON:  --because you haven't got a line for copyright in your own financials.

6712 MR. SHEA: That's correct.

6713 THE CHAIRPERSON: Okay. I think I have that, clearly.

6714 Just one final question, in your reply, and and in your presentation, as well, you highlight access by Canadian artists to the U.S. market.

6715 I guess we are all pleased when we see Canadians become big stars and so on. Particularly, I think many people have commented that the Commission's Canadian content rules on radio over the years have contributed to the careers of many people who are now big international star.

6716 But I'm wondering whether that's really an objective of the Broadcasting Act or whether we really shouldn't be looking at access to the Canadian market and what the Canadian listener should have as one of the keys to our proposal and whether access to the U.S. market is, we have heard from a number of intervenors, a) that important; b) that realistic; and c) is it a real head under the Broadcasting Act that we should even weigh, give a large amount of weight to?

6717 MR. SHEA: It's a very fair question, Chairman, but I think, in light of the many intervenors that have appeared before you today, they are really saying, I think, at the end of the day, two things.

6718 One--and this is with respect to those who don't get played--is we have to find a way to get access to our system within Canada; and secondly, the opportunity of profitability.

6719 I think the Factor study said it very well, that unless there really is an opportunity for exposure to the international marketplace, it's very difficult for the majority to actually make a living being in the music business in this country.

6720 I'm reminded a little bit, hearing some of the intervenors today, Mr. Chairman, of the many producers that appeared before this Commission attempting to get more voices, choices on television and what especially television did for the creation of our system here in Canada was, interestingly enough, once channels opened up more opportunities were there for Canadian programmers to make more television programs.

6721 I think the essence of what we are really saying is that, if this is going to be a North American platform--and it's why I raised it in my closing remarks--that we do have to think beyond the five channels. Because if the service is going to be available in Canada, obviously, we want to ensure that we do everything on our part to ensure that there's more access to the other music channels for Canadian artists. That's why we see it as so profound, because this is quite a different platform vis-à-vis the fact that it's North American than we have dealt with previously.

6722 MR. SLAIGHT: If I could also, the benefits that we have in our application, including a substantial amount to Factor and Music Action, who are in need of money right now, that stays in Canada and that goes to Canadian artists to help them produce CDs, the National Talent Contest that we have, as part of our initiatives. So there's a lot of elements of our application dealing with: how do we support Canadian artists in Canada? We feel an important part of the careers of Canadian artists, as we said, is impacting the United States on top of that.

6723 THE CHAIRPERSON: Okay. Thank you.

6724 One further question is on--I think it was you, Mr. Buchanan, in the reply, who said there was a caveat about another equivalently licensed service. Is that what you said? I'm not sure what your point was there.

6725 MR. BUCHANAN: We were volunteering a number of conditions of licence to be applied to our services, should we be licensed, but we would like to have a level playing field and ensure that, if others are licensed, that there's equivalent obligations placed on them--

6726 THE CHAIRPERSON: Right.

6727 MR. BUCHANAN:  --so that we aren't the only ones with those conditions of licence.

6728 THE CHAIRPERSON: No, no, I understand that. But bearing in mind the fact that two or your stations are already licensed stations and your competitor for satellite service is, of course, not offering any existing licence services, I'm not sure how you would measure that.

6729 MR. SHEA: I think we respect, Chairman, that there are some unique differences, but the requirement, for example, that 50 per cent of the CTD money be equally spent between the francophone and the English markets, I think those that are generally applicable should be applied across all of them.

6730 THE CHAIRPERSON: Okay. I take that point. Thank you.

6731 MR. BUCHANAN: And that we use the equivalent and comparable. We understand there are going to be snakes and ladders in there because of the different...

6732 THE CHAIRPERSON: Right.

6733 Commissioner Langford.

6734 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.

6735 I, really, just have one question. I listened very carefully to your reply and it seemed to me that you did not reply to one type of intervenor, if I can put it that way, one category of intervenor. You replied to almost all, but you missed one, it seems, and that is the community and campus radio folks, who came to us really quite worried and quite kind of conscious of the fact that somehow they are going to be left out of this, that they have struggled and tried to serve a market that may be so well served by you--and I think they wish you well--but will be so well served by you that, as one intervenor said, "We will go back to being kind of a campus club, a hobby".

6736 One can understand the frustration. If you have put a lot of time and effort and years, as the people from Edmonton did, 77 years, I think, and some less, into these sorts of enterprises, you want to feel there's a place for you in the system. If you have made a contribution, you want to feel that you get something more than a wave good-bye.

6737 They may have asked for more than you feel you can afford or build into your plan financially, but I was surprised to hear nothing, actually.

6738 Now, sometimes flannel is worse than nothing, and I recognize that, but I wondered, in your considerations, whether you could speak to their concerns and perhaps give us some sort of a creative notion of how you might be able to work with them to help them.

6739 I mean, when I think of the creativity that's been brought to helping the aboriginal network that's coming up, you people can be pretty creative when you want to be, and I have heard nothing about this. I wonder whether you gave it any thought and have any notion of what you might be able to do there.

6740 MR. SHEA: That's very fair. I was in the room, Commissioner Langford, when the presentation was made.

6741 In our chance to sort of debrief, in the short period we did have before appearing before you this afternoon, I did ask both Gary and Michel if by any chance there was any contact by the representatives in advance of our file or post our filing. Grant Buchanan did indicate that there was a phone call made wondering if they could gain access, from a carriage standpoint, and that their interpretation, at the time, of satellite radio was it's something where we would be picking up stations and paying subscriber fees, and therefore there would be a contribution for them. We made that clear that wasn't really the model that we were advocating or building.

6742 What they didn't ask, and what we would certainly give the Commission every opportunity to determine, was they did not ask to become part of our CTD. Many organizations in this country, as you know, have gotten very wise once there is either a change of ownership or whether there's new technology being licensed by the Commission, that they hustle in on the opportunity to be able to get a direct benefit.

6743 But in the Commission's determination of the benefits that we have put forward, there's always the opportunity, in the Commission's wisdom, to alter, change the mix. If that was the determination of staff, they would have our blessing to do so. I think we were all quite moved by the realities with which they live.

6744 MR. SLAIGHT: If I just may add to that, I know for a fact that the National Campus and Community Radio Association does qualify as a benefit in that we have given them money over the years, as part of our benefits in other radio transactions. So there is opportunity for discussion there, definitely.

6745 COMMISSIONER LANGFORD: Well, I appreciate that.

6746 Would I be wrong, then, in assuming that if we were to exercise our powers of persuasion in something less than a COL, an expectation that you also reach out to them in other ways, that you would be open to that, as well?

6747 MR. SHEA: Most definitely.

6748 COMMISSIONER LANGFORD: Thank you very much.

6749 Those are my questions, Mr. Chairman.

6750 THE CHAIRPERSON: Okay. I will ask you if you have any final wording.

6751 I'm mindful of a comment I think one of the intervenors raised today, so if you could address that, I would appreciate it. I'm going to put the same question to your satellite competitors. I think the line was: is this the best Canada can do? I offer you an opportunity to do a final comment and perhaps address that point.

6752 MR. SHEA: I guess, in fairness, Mr. Bitove has had the benefit of about two-and-a-half years trying to build a business plan. Mr. Tremblay approached SIRIUS in the U.S., I think, Michel, about a year ago or so. So there has been an extensive campaign, monumental hours spent on shareholder agreements.

6753 I think each entity trying to understand each other's both business and cultural objectives, I know for the two representatives that we had from SIRIUS U.S. with us for the better part of two-and-a-days, Mr. Gregor and Mr. Briskman, this was probably the best forum for them, having never attended a CRTC hearing before, to really get a much better understanding of the dynamic of our country and the choices, voices, the kind of considerations we go through, when we are attempting to address new opportunities in our country.

6754 Mr. Chairman, let me say this, that we would all love to have another alternative. I think we all would, as Canadians. We would love if this was not too dissimilar from DTH, that there were folks who stood up and said not only is there capacity and slots, but, "Here's the money, I'm going to build them". That is the fundamental issue confronting this ultimate decision because that opportunity doesn't present itself, and if it does, it's 10 years out.

6755 I think both Gary and Michel eventually came to the conclusion that the only way we can benefit is to try and convince SIRIUS to say maybe if we can get some capacity, maybe if we could put some Canadian channels up, maybe if we can get started, maybe if we could have the right to be able to program some of your channels eventually, and maybe once we get the opportunity to work together, as partners, we will be able to see a much more expansive role for Canadian talent and Canadian opportunities.

6756 We have to prove to them, though, that we are going to have subscribers. In fairness, they are going to have to see that we are making a meaningful contribution to the capacity that they are giving us.

6757 I feel incredibly optimistic about the business potential of this. I think it's going to do phenomenally well in Canada. And the better we do, I think the better opportunity we have to negotiate with our partner for more opportunities to address our consumers directly.

6758 Is this the best Canada can do? I think it is the best shot we have because, if we don't do it--and this is not a threat, Mr. Chairman, members of the Commission and staff--if we choose not to do this, we will lose. Canadians are going to buy this, Canadians are going to endorse it, Canadians are going to want to have access to it.

6759 You heard throughout the course of the last four days the prices of these things are tumbling and becoming much smaller and truly more mobile. Kids are going to go to New York and they are going to buy one of these things for 49 buck, or whatever they are going to be next year and, believe me, they are going to get Aunt May or Uncle Jim or some other Internet service to wire them up. If there's no Canadian benefit, no Canadian opportunity, we have lost.

6760 I will conclude by saying, one of the things that attracted me when I was approached by Michel and Gary to join SIRIUS, and I think, as many of the members of the Commission know, my background is almost exclusively in television, what I saw, what absolutely blew me away, when I was able to read the business plan, was this is the first time ever we are going to have the chance to export channels, the first time ever. We have never done it in television. The first time. And there are a tonne of Canadians, who are residents in the United States of America, that would love to get the CBC and Canadian programming.

6761 When I looked at the ratings of SIRIUS U.S., what's their top 10--I know I said this the other day--it's quite interesting how every now and then it's the BBC. I think there's a very good chance, because American are interested in alternate voices, that it's going to be the CBC or it's going to be The Wave.

6762 Maybe the report card that we bring back to you seven years from now isn't the playlist that I talked about the other day, where we are 9 per cent on this channel, 8 per cent on this channel, and then a whole bunch of channels at 0--and I will be happy to file this with the Commission.

6763 It's channel by channel what the Canadian content is over the course of three days. This should be our report card seven years from now, where we see all of these zeros with real percentages. hopefully higher than 7, 8, 9, hopefully, but certainly better than it is today.

6764 Thank you, Mr. Chairman.

6765 THE CHAIRPERSON: Thank you very much, gentlemen and Madam.

6766 Mr. Secretary.

6767 THE SECRETARY: Thank you, Mr. Chairman.

6768 I will now ask the Canadian Satellite Radio Incorporated to respond at this moment.

--- Pause

6769 THE CHAIRPERSON: I think the secretary would tell you you have 10 minutes.

--- Laughter / Rires

REPLY / RÉPLIQUE

6770 MR. BITOVE: We apologize. The photocopier ate some of our homework, so the first thing we are handing out is the first two pages of Tab 1, as part of the programming line-up, as well as a copy of Steve's and my remarks tonight.

6771 There was one small addendum in the programming line-up, Mr. Chairman.

6772 Based on SIRIUS' presentation, we would like to reconsider in the programming grid, including the traffic and weather channels. SIRIUS raised a valid point, that Canadians who travel to the U.S. and border cities, particularly truckers, would need this traffic service. If we were not to provide it, then we would force a grey market issue.

6773 We haven't fully studied it, but we did say we weren't intending on carrying it. But they raised a valid point, so we want to--that's the great thing about these hearings, you can have a chance to reconsider before it's finalized.

6774 What you are looking at here, with the exception of our esteemed counsel on the end, is the first of the seven CSR management team who have been working for almost over two years on this effort.

6775 Most recently, Steve, joined as our president and COO, and before we reply to the interventions, with your permission, I would like to ask Steve to provide the Commission with answers to several undertakings that we gave during phase one of this hearing process.

6776 MR. TAPP: Thank you.

6777 I hope to be as eloquent as Mr. Grant Buchanan on this.

6778 Mr. Chairman, on Monday and Tuesday, we agreed to return at this stage of the proceedings with additional information to clarify certain aspects of our application, as filed. We provided Commission staff with a document that responds to those undertakings. But for the record, I would like to take your through our responses.

6779 The first document we filed responds to Commissioner Pennefather's questions about, number one, the nature of the channels to be offered by CSR; and two, the nature of the music on each channel. We have submitted a spread sheet that provides for each channel the name, a brief programming description and whether it broadcasts category 2 or category 3 music, or both.

6780 Vice-Chair Wylie also asked us to indicate what the approximate spoken word content would be for the channels that CSR will distribute on our four proposed channels. We would expect about 15 per cent of each of Northern Lights and Lumières nordiques would be spoken word; 100 per cent of Laugh Canada and A Propos would be spoken word, as well.

6781 Such content on the existing XM music channels ranges from as little as one minute per hour to as much as four minutes per hour, depending on the format. Of course, news, talk and sports channels are all spoken word. There are a few channels with a mix of music and spoken word, in particular the children's channels.

6782 Next, you asked us what channels CSR would maintain logger tapes for. We will, of course, keep logger tapes for each of CSR's Canadian channels. We will also maintain tapes for XM channels which are designed either XL or premium, or those with controversial talk content. We have provided you with a list of these channels.

6783 Vice-Chair Wylie also asked CSR to indicate why we believe our two music channels, Northern Lights and Lumières nordiques, would qualify as specialty music formats, under section 7.7 of the Radio Application Form. That section specifies that a station is considered to be in the specialty format if less than 70 per cent of the music is from category 2.

6784 We reviewed the proposed programming schedules of each of the channels and determined that less than 70 per cent, indeed, less than 60 per cent, in fact, of the music broadcast on those two channels would come from category 2. The other 40 per cent would come from a range of the category 3 subcategories.

6785 We would prefer not to make specific minimum commitments in each of these subcategories, but, rather, to be bound by a condition that no more than 60 per cent of the music on either of these channels should come from category 2.

6786 Next, you asked CSR several questions about our Canadian talent development plans. First, we were asked why we didn't fill out section 7.2 of the Radio Application Form, which asks if the applicant will participate in the CAB industry-wide plan for CTD, which, as we know, is designed for individual conventional commercial radio stations.

6787 In CSR's original filing, in August 2003, we indicated that CSR would not participate in the CAB plan, but, rather, that we would far exceed the minimum CTD requirement by spending $4.1 million on CTD over the seven years of the licence term.

6788 In May 2004, CSR amended the amount to nearly $20 million. We provided a photocopy of that page from our May 2004 filing.

6789 We were also asked about a small discrepancy between the amounts filed on one page and those another for CTD. We provided a second document to you that provides the correct amount, which is listed on the table on page 10, and is in the amount of $160,000.

6790 We were asked several questions about CSRs proposed lateral programming. Chairman Dalfen asked us how much lateral programming XM is broadcasting at present. For CSR, "lateral programming" means "special Canadian programs featuring Canadian artists only, that would be broadcast on one or more of the XM-originated channels". To date, XM has broadcast three such programs.

6791 Commissioner Langford asked us to quantify how CSR's commitment to 1,872 hours per year of such programming should be reflected as a percentage of time, or to provide some other way to measure it

against traditional channel standards.

6792 Our calculations show that 1,872 hours is the equivalent of 11 full weeks of programming 24 hours a day.

6793 We were asked about the potential beneficial impact of CSR's commitment that 7 per cent of the new additions to XM channels playlists would be Canadian. We were asked what XM's Canadian content level is now, and what the impact of the 7 per cent increase would be in terms of hours of programming.

6794 Currently on the XM channels each programmer adds the songs that he or she wants, without regard for its nationality, obviously, but we estimate that across the 70 XM music channels, Canadian content currently represents approximately 2.5 per cent of all music.

6795 Now, if we add the lateral programming to the existing Canadian content, we estimate that this would represent the equivalent of another two full channels of Canadian music.

6796 We have provided a document which illustrates our calculations. We are not suggesting that this should be is a condition of licence because there are too many assumptions and variables, but we prefer that any commitment noted in a decision be based on what we proposed on Monday: 1,872 hours of Canadian programs each year on the XM music channels and 7 per cent of the additions to the playlists.

6797 Commissioner Williams requested a copy of CSR's Technical Services Agreement with XM. We apologize we weren't clear in our response. CSR, in fact, does not have a separate Technical Services Agreement with XM. Rather, the elements are found across a number of the draft agreements we had filed previously.

6798 For example, our memorandum of understanding with XM already includes commitments between the parties regarding technical services. These commitments are set out in section 6 and Schedule B of the MOA. We have provided you

with a copy of these sections, as well.

6799 We have also provided a copy of a brief amending letter that shows that three of nine members of the board of directors will be XM nominees.

6800 Finally, you asked us to break out the several components of the royalty that CSR will pay to XM. We have provided a spreadsheet of detailed information. It also provides a breakdown of the programming expenses that we filed in may. The spreadsheet also includes detail with respect to the XM royalty in three categories. We have set it out into three categories: category 1, subscription royalty; 2, premium channel royalty; and 3, activation royalty.

6801 John.

6802 MR. BITOVE: Thank you, Steve.

6803 Mr. Chairman, Madam Vice-Chair, members of the Commission, and Commission staff, we believe that Canadian satellite radio has fulfilled all the undertakings it gave earlier this week to provide further information in support of our application for a satellite subscription radio distribution undertaking. That's a mouthful.

6804 If there is anything further that the Commission requires, we would, of course, be pleased to provide it.

6805 I would now like to avail myself of this opportunity to respond on behalf of CSR to all of the interventions that have been filed and presented in this proceeding in relation to our application.

6806 First, I would really like to thank the almost 400 individuals, mostly musicians, comedians and other performing artists, who filed letters in support of our application when we don't even have a broadcast licence. Several of these artists also took the time to travel to the nation's capital to appear before you today in order to personally explain why they believe it is important, and in the public's interest, that the CSR application be approved.

6807 Independent Canadian performing artists, such as Susan Aglukark, Jeff Healy, Bruce Hills, and young Canadian entrepreneurs like Franz Schuller, have explained eloquently and with passion why they believe it is important not only that the airplay gap on Canadian radio be closed, but also how important it is that Canadian performing artists benefit from this opportunity for increased exposure to audiences throughout North America.

6808 The Commission has heard from a sample of the performing artists who strongly support our application. I am confident that you heard them loud and clear and have understood their message. With regard to those intervenors who either opposed or filed letters of qualified support for our application, we provided the Commission and all intervenors, on September 27th, with our omnibus, detailed written reply to all interventions. And I actually read every one.

6809 CSR's written reply was 35 single spaced pages in length. It responded to intervenors' concerns relating to such issues as:

6810 our proposed allocation of CTD funds;

6811 our plans to deal with controversial programming;

6812 our usage of terrestrial repeaters;

6813 protection of intellectual property in digital recordings;

6814 access for unrelated third party programming;

6815 the potential impact of satellite radio on conventional broadcasting stations and DAB;

6816 grey market issues;

6817 licensability of our proposed satellite radio undertaking under the Broadcasting Act.

6818 We believe that our written reply was carefully considered, responsive, and addresses all of the issues raised over the past three days.

6819 I would note, however, that Corus Entertainment appeared, both as an intervenor and as a member of our presentation team. Yes, Commissioner Langford, that was John Cassaday here earlier. He wasn't in a halloween outfit.

6820 Corus is both a committed partner and a supporter of CSR. However, as you are well aware, Corus is a prominent Canadian broadcaster with extensive interests. From our perspective, they presented proposals for the Commission to consider as it prepares for its upcoming review of radio policy next year.

6821 Additionally, we read and listened intently to the well-reasoned intervention of CKUA radio network. I actually wrote them a personal note at the time and said I thought it was great, even though I disagreed with a lot of it.

6822 CSR however would like to indicate that while our CTD plans are firm as filed, if we have the privilege of being licensed, and if we have the CTD fund -- and by the end you will see we have a little bit more -- not currently allocated in our budgets, we would be favourably inclined to designate community and campus radio stations as eligible third party participants to CTD funding. It is part of the benefit of licensing us.

6823 In response to the issues that have been raised we would like to reiterate that our market research, and the Arbitron studies done in the U.S., indicate that satellite radio will have no significant impact upon commercial radio's robust advertising revenues. Furthermore, no data has been provided to the contrary in this proceeding.

6824 To be clear, CSR is offering a pay service, one that is completely discretionary: one that will not flood existing radio markets. It is a question of listener and consumer choice: free versus pay. The playing field need not be levelled, as we are not playing on the same field.

6825 Our proposal is very different. We believe that this is a country of "universality" and, in this case, whether you live in urban or rural Canada, you are entitled to the same selection of services and choices.

6826 The Commission has asked us to provide our proposal for a formula to ensure equitable treatment of the potential licensees in channels and CTD contribution. We believe that we have come up with an exciting approach to this matter.

6827 Some revisions to our application. I agree with Kevin, it was wonderful having the Americans here for a few days.

6828 CSR will launch with five Canadian channels. The fifth channel will be a new addition to our lineup. It will be a multi-ethnic, multi-lingual Canadian channel. I would like to thank Mr. Lombardi for his endorsement when he was up here speaking about the need for more multi-lingual programming.

6829 Secondly, by the end of our fifth year of operation, we will add three more Canadian channels, if capacity is available. I will speak to this in a bit.

6830 We will also make further contributions of either of the two following options for your consideration, because you asked us to think about a formula.

6831 We will commit to a floor of 4 per cent of subscriber revenues directly to CTD, and no less than $1.2 million -- as we indicated with Commissioner Pennefather because of the discrepancy in the startup -- a minimum of $1.2 million to CTD for each year where the minimum payments do not exceed $1.2 million. Of course, it would start in our first year of operations.

6832 However, because of the extent of our original programming, what we would really like you to consider is 8 per cent of our annual revenues will go towards a combination of original Canadian programming and CTD, but no less than 4 per cent being directly CTD. Again, I understand, Mr. Chair, in discussions with Mr. Buchan, simplicity is key and we are merely proposing something that we think in fairness works for all groups, but if it has to be with the one number then we are proposing the 4 per cent.

6833 With respect to the additional three channels, as an insurance policy, starting in the fifth year of operation, we will increase our CTD commitments by 1 per cent for each channel that we have not yet offered on our service. To be clear, that is 1 per cent for each so if we didn't do the three it would be a 3 per cent increase in CTD.

6834 Regardless, the amount contributed to CTD will increase significantly. Under our new formula and the 4 per cent floor, and the total of almost 8 per cent, we expect to spend $70 million on original Canadian programming, including $28 million for CTD equally split between -- and this is something we are also revising -- equally split between French-language and English-language talent initiatives.

6835 Since we have additional funding, as we spoke of earlier, in the community and campus radio, we think we also can look after another ground-breaking French linguistic CTD initiative.

6836 Since we are showcasing Canadian artists in the United States we started thinking and we believe that it would be appropriate to give Francophone artists exposure in foreign markets where they can have maximum impact. On an annual basis, we will devote a minimum of $400,000 to two international showcases of French-language Canadian artists. At least one will take place in Paris every year and another in a location de la Francofonie.

6837 In total, our commitments will ensure that by the end of license term 10 per cent of the programming across the entire XM system will be Canadian, a figure that represents our proportion of the continent's population base. This will allow a new generation of broadcasters to secure prime real estate on the XM landscape as satellite radio inevitably goes global. We look forward to a future where Canadian Satellite Radio can play a role as an accountable, responsible, contributing licensee to our country and the Canadian broadcasting system.

6838 Mr. Chairman, Madame Vice-Chair, Members of the Commission, Commission staff who we have been bothering for three years, and I would like to mention Industry Canada as well because they have been a great partner with your staff, thank you for the opportunity to appear before you today and express our commitments to you. Our team is very excited. We want to be part of a new generation of broadcasters in this country, and we want to offer a positive contribution to our broadcasting system which we cherish and we are all so proud.

6839 Thank you. Any questions?

6840 THE CHAIRPERSON: Thank you, Mr. Bitove. I will start off with a few.

6841 On your financial tab first of all, which is Tab 6 --

6842 MR. BITOVE: Yes, sir.

6843 THE CHAIRPERSON: Thank you for breaking down the figures. Having done so, though, the totals appear to be slightly out of sync with the totals that we have in our projections as filed. You may want to just review that.

6844 MR. BITOVE: These are revised, I believe, because of the increase of the 4 per cent floor, Mr. Chair.

6845 THE CHAIRPERSON: I see. So you haven't taken them right the way down. You have just taken the --

6846 MR. BITOVE: I'm sorry. You are on the XM royalties, sorry. I was on the programming.

6847 THE CHAIRPERSON: No, I'm not. I am on the programming.

6848 MR. BITOVE: Okay, sorry.

6849 THE CHAIRPERSON: The programming and the administrative in general, these two don't quite mesh with the numbers. The deviations are small, but you may just want to have a look at that.

6850 MR. BITOVE: Okay. We will verify with staff which of the two sets are correct.

6851 THE CHAIRPERSON: I don't think they are material though so you don't have to refile anything with us unless something comes to your attention.

6852 On the tab relating to the incremental benefits -- Tab 5, I guess -- you are basically saying -- and I think you had a good testimonial today from Indie's Pool and others who indicated that there was a lot of programming carried. But basically your incremental benefit associated with lateral programming and the impact of the additions is a third of a channel or a quarter of a channel, 1.75 is there any way, which makes some of the Indies quite happy but is really not a benefit of this transaction in effect. So the incremental benefit is the .2 and .1 1 and 2 and then you have melded the whole thing down.

6853 I think fairly it is a fair analysis down to saying there will be two channels thanks to us, probably a quarter or a third more than they would otherwise be, but you could count on the natural level that Canadian artists could achieve is to their delight, one and three-quarters --

6854 MR. BITOVE: What we were trying to do was indicate -- I think Commissioner Langford had tried to say: Is there any way you can put this into numbers that me as a Commission would understand what it all equates to. That is why we ultimately got to when you add them all together it is two channels.

6855 THE CHAIRPERSON: I asked you a question which was what is there already. You have answered both those questions.

6856 MR. BITOVE: Yes, sir.

6857 THE CHAIRPERSON: I was again trying to measure what additional benefit you were bringing and the answer is the quarter of a channel that isn't there now.

6858 MR. BITOVE: On the lateral and this other programming, correct. But the new spins is larger as well, right, the 7 per cent.

6859 THE CHAIRPERSON: I thought that was the new spin.

6860 MR. BITOVE: Sorry. The combination of the lateral and --

6861 THE CHAIRPERSON: The .2 is the new spins.

6862 MR. BITOVE: Yes, you are correct.

6863 THE CHAIRPERSON: Okay. Have you had a chance to review SIRIUS' COLs?

6864 MR. BITOVE: No, sir.

6865 THE CHAIRPERSON: Well, I thought in our discussion that you had indicated that you were prepared to accept a responsibility for abusive comment and anything in contravention of the law.

6866 I don't see those in your COLs.

6867 MR. BITOVE: I thought we stated it on the record. If you want it in writing we are happy to provide it.

6868 THE CHAIRPERSON: I would have thought that --

6869 MR. BITOVE: We said we would join the Broadcast Council.

6870 THE CHAIRPERSON: That is in there, but you didn't undertake as a COL to not distribute a programming service that contains abusive comments.

6871 MR. BITOVE: I'm sorry. We had three of us writing lists and somehow none of us got it.

6872 MR. BUCHAN: We certainly are prepared to do that, as we mentioned on Monday.

6873 THE CHAIRPERSON: So it wasn't in there. Nor was the no advertising on the Canadian channels, which again is in the SIRIUS conditions and --

6874 MR. BITOVE: We do differ from SIRIUS on our Canadian channels that we are saying that there would be no local advertising, but we have always stuck to the position on national advertising on our Canadian channels.

6875 THE CHAIRPERSON: So you would carry national, but not local?

6876 MR. BITOVE: Yes, sir.

6877 THE CHAIRPERSON: That no local, I guess you would be prepared to accept a condition of license?

6878 MR. BITOVE: Yes, sir.

6879 THE CHAIRPERSON: Okay. Those are kind of the detail ones.

6880 You mentioned CKUA's intervention and I would like you to address in particular -- I don't know whether you have their document, I will give it to you if you don't -- where they propose that you ought to have a condition of license imposed upon you which -- or you want to accept one, where you would accept a minimum of 10 per cent of channels offered to Canadians being Canadian programming services by the commencement of the third year of operations?

6881 MR. BITOVE: As I said when I even wrote CKUA and commended them on a very well thought out intervention there were certain things I disagreed with. When Commissioner Pennefather asked the question of: Somehow I don't get what the issue is here.

6882 The issue is, they are a not-for-profit group and fund-raising could become difficult because of some of the niche programming they offer versus what we do. What I wanted to demonstrate to you today is, we understand that point and if there is any impact at all we want to help them.

6883 THE CHAIRPERSON: That wasn't my question. My question was: They are saying why don't you commit to a 10 per cent number instead of what is roughly a 5 per cent number for the number of Canadian channels that you will make available in Canada?

6884 MR. BITOVE: That is one of the points I didn't agree with on CKUA. I think that Kevin said it very well: Starting at 5 and growing when we have no subs.

6885 You know, Commissioner, it doesn't matter what we put in writing, my expectations of this management team is to exceed those numbers. We are all proud Canadians and it doesn't matter what our channel commitment is, we want to be able to do better and we want our programming to be recognized as some of the best programming on satellite radio.

6886 For the record, I disagree with the 10 channel by the third year, but are we going to stop it at whatever number we are at, five, eight and growing? No.

6887 THE CHAIRPERSON: Is the reason that you can't get that deal from you American partner?

6888 MR. BITOVE: It's a spectrum issue right now, as well as they are giving up precious real estate on what, ultimately, will be a global platform and we haven't proved to them that we can do great programming.

6889 THE CHAIRPERSON: Basically, I'm taking that as a yes.

6890 MR. BITOVE: Yes.

6891 THE CHAIRPERSON: That's the best deal that you can get?

6892 MR. BITOVE: At the current point in time, yes.

6893 THE CHAIRPERSON: Right. You say they were here. You called it a "wonderful time" or I think Mr. Shea said it was a good--

6894 MR. BITOVE: Well, they love it in Ottawa.

6895 THE CHAIRPERSON: You hear the debate that--

6896 MR. BITOVE: Three late nights of arguing.

6897 THE CHAIRPERSON: Well, when people ask us about the equivalence of the CRTC and the FCC, I just say that the equivalence in telecom is pretty much there. There are differences in the mandating statutes, but the fundamental provisions are not dissimilar, but the difference is in broadcasting. We have the Broadcasting Act. In Canada we have always used broadcasting as an important cultural instrument and you are asking us to license a service here that is--the threshold of Canadian contribution is very, very low.

6898 I'm thinking, Mr. Bitove, is a good businessman and a good negotiator. Would it help you if we sent you back with a word that said, "Nice try, but, in fact, it's much too low" and "He needs help" and would you be able to hold that piece of paper up as a negotiator and say to them, "You know, we hav got to do better"?

6899 MR. BITOVE: I think we have beaten them up as much as we can beat them up right now. I think that our commitment of the eight channels is something that we are committing that we are going to get to by the fifth year. We need to establish a relationship, show what kind of programming we could do.

6900 I think that, as I said, when we are 10 per cent of the population base of this continent and we have roughly achieved, during our first licence term, an equal amount that way, it's a pretty good start.

6901 When you think of all the tens of millions of dollars to our artists that we are going to bring, but not only that, the exposure we are going to bring, and not only into the U.S., but as the system continues to grow globally, I don't know of any other better instrument at this point in time, which is why I think the independent artists, in particular, have been lining up behind both satellite providers.

6902 THE CHAIRPERSON: Okay. I don't want to prolong this, but when I read the draft that you provide in Tab 9 from XM to Ron Levin, SVP, I see that your five-channel deal is pretty well an obligation. But beyond five, there's a "negotiate in good faith" clause "to determine whether additional capacity on the XM system can be provided in order to accommodate". I notice in seven that the commitment that we just discussed, to add the 1,872 hours of what you called "lateral programming", is an expectation, as is the 7 per cent of weekly additions.

6903 It gets considerably softer after the first five channels, so, really, that's what we have, that's the deal we have, plus the negotiation in good faith.

6904 MR. BITOVE: I think between the lateral programming and the additions and adding the fifth channel and the commitment of the additional three is a great start for this business in this country.

6905 THE CHAIRPERSON: Well, "shal work with", "as an expectation of the CRTC licence, CSR shall work with XM to ensure that 7 per cent...".

6906 MR. BITOVE: I haven't read the SIRIUS one, but I don't believe it's that much materially different. The parties are going to work together.

6907 THE CHAIRPERSON: No, no. this wasn't to put you in contrast to SIRIUS. As I indicated, my question, then, to you is: when you wrap up, is the best deal for Canada? I guess I'm trying to get clear on what the deal is here. It's really the deal is five channels, plus best efforts and good faith, beyond that.

6908 MR. BITOVE: Yes, sir.

6909 THE CHAIRPERSON: That's what we have to read, in light of the Broadcasting Act, and decide whether this is licensable, however we stretch our minds to achieve it, and bearing in mind all the points that you have made. I'm not saying it all comes down to this, but I'm just trying to really get clear on what--

6910 MR. BITOVE: I understand. That's why--

6911 THE CHAIRPERSON: And whether we can't do better.

6912 MR. BITOVE: I understand, Mr. Chair, and that's why we offered in there the additional CTD if we don't produce those channels. We believe we will produce those channels. I am totally confident that we will be producing those channels, and probably sooner than five years.

6913 THE CHAIRPERSON: Thank you.

6914 A final word--

6915 MR. BITOVE: Oh, boy.

6916 THE CHAIRPERSON:  --is this the best deal for Canada?

6917 MR. BITOVE: Well, when Stewart and I started on this four years ago, the best deal would be to fly your own birds and finance them. Between Telesat and financial markets and conditions and orbital slots and everything else, that would have been the best deal. But we have a proven technology right now that's at our finger tips and we have, potentially, a burgeoning grey market. I agree with everyone who said we should keep those funds in Canada.

6918 We have a tonne or work to do. Should you be willing to give us this precious licence, you know, over the next few months here is how I see this unfolding. We have to get these five channels launch. Bob and Andre have a lot of experience, but they are going to have to pull it altogether quickly, and then the additional channels, as we need to program those, and the lateral programming.

6919 We have our retailers lined up, that Melissa has been there, on the shelf space and everything required to get going now. Telesat is all ready to install the ground repeaters that are required. Steve has to put in the balance of the staffing, as well as the advertising campaign. And, of course, the OEMs that came with us today need a good lead-time for their production model so that they can start selling more cars with a newer device in them.

6920 That kind of takes us for the first six, seven months. Beyond that, it really is up to us to make sure, in our relationship with XM, that we are great partners and that we continue to get more and more.

6921 The role for our Canadian programming extends beyond music. It goes into comedy, news, current affairs, French--of course language is spoken in both the news and programming. Obviously, additional channels is something we are going to continue to reach for and fight for.

6922 Madam Vice-Chair, you said earlier today this looks like the same old. I can assure you with our group that's not the case.

6923 I hope, Mr. Chairman and the Commission, you will trust us and trust that we will not let you down, we will not let our country down, we will make everyone very proud of what we are able to accomplish as a Canadian broadcaster.

6924 My objective is the same as yours: to have unbelievable Canadian programming that is world-renouned. For the artists, it's not only exposure in Canada that's important. It's global exposure, which is what they truly seek.

6925 Our goal is to create a thriving Canadian cultural scene, which this Broadcasting Act is one of the important pegs of protecting. What we want is for our country and our culture to be world-renoun because Canada can and does make a difference in the world. I think at this point in time, given everything we have done and all the work we have done, this is the best we can get today, but that doesn't mean we stop fighting for more.

6926 Thank you.

6927 THE CHAIRPERSON: Thank you very much.

6928 I believe this concludes this item. The final item will be heard tomorrow morning by a different panel beginning at 9:30 a.m. On reprendrai demain matin à 9 h 30.

--- Whereupon the hearing adjourned at 1910, to resume on Friday, November 5, 2004 at 0930 / L'audience

est ajournée à 1910, pour reprendre le vendredi

5 novembre 2004

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