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Letter from CRTC to Industry Canada and Canadian Heritage
Canadian Radio-television and Telecommunications Commission
October 17, 2003
FAX: (819) 994-0979
Judith A. LaRocque
Deputy Minister Canadian Heritage 25 Eddy Street 12th Floor – Mail Stop: 25-12-O Gatineau, Quebec K1A 0M5
FAX: (613) 954-3272
Jean-Claude Villiard
Deputy Minister Industry Canada 235 Queen Street CD Howe Building – Floor: 11E – Room: 1162A Ottawa, Ontario K1A 0H5
Dear Deputy Ministers:
The Commission has received an application for a licence to establish a broadcasting
undertaking to provide a Canada-wide subscription satellite digital radio service.
The applicant is proposing to use the facilities of XM Radio Inc., which is
licensed to provide a satellite digital audio radio service (SDARS) in the United
States, and a series of terrestrial repeaters. It is proposed that subscribers
to this proposed broadcasting service would be receiving Canadian and US originated
programming services via existing US satellites and the proposed terrestrial
repeaters in Canada.
The Commission is reviewing this application in accordance with the objectives
set out in the Broadcasting Act. This proposal and any other similar proposal
raises the need for clarification of the government policy regarding the use
of Canadian satellite facilities for the transmission of Canadian programming
services in Canada, and in particular digital radio by satellite.
A clarification was provided in the context of direct-to-home (DTH) satellite
distribution and pay-per-view television programming undertakings. This was
a letter to the CRTC dated June 14, 1995, from Harry Swain, Deputy Minister,
Industry Canada, and Marc Rochon, Deputy Minister, Canadian Heritage.
In the Appendix to this letter you will find the facts as they relate to satellite
digital radio service in Canada and arguments raised by the applicant in support
of a clarification that would permit the use of non-Canadian satellite facilities
for such a Canada-wide service. We note that because the above and the attached
excerpt is proprietary to the applicant, the Commission treats it as confidential
until it is published to invite public comments.
I am certain that you will understand that a clarification of the government
policy is fundamental to the Commission’s review of this application.
Thank you for your consideration of this matter.
Yours sincerely,
Diane Rhéaume Secretary General
Appendix
(The following is a portion of the Canadian Satellite Radio Inc. application
to the CRTC)
THE USE OF FOREIGN SATELLITES SHOULD BE PERMITTED
Prior to 2000, the use of a foreign satellite for distribution of programming
services within Canada was limited to two types of situations:
- The distribution of foreign programming services by means of foreign fixed
satellites to Canadian Broadcasting Distribution Undertakings.
- Emergencies leading to a lack of domestic Canadian satellite facilities.
The policy was set out in a letter to the CRTC, dated June 15, 1995 from Harry
Swain, Deputy Minister, Industry Canada and Marc Rochon, Deputy Minister, Canadian
Heritage:
- In this context, where a Canadian broadcasting undertaking wishes to use foreign
satellite facilities, the Canadian policy concerning the use of satellite facilities
should be interpreted as follows:
- the undertaking should make use of Canadian satellite facilities to carry
(ie. receive and/or distribute to Canadians) all Canadian programming services
but may use either Canadian or non-Canadian satellite facilities to carry
foreign originated services that are intended primarily for foreign audiences
and are authorized, in whole or in part, for distribution by CRTC; and
- under no circumstances should an undertaking use exclusively foreign satellites
for the distribution of its services to Canadians. However, in the case of
emergencies leading to a lack of availability of Canadian or foreign satellite
facilities, back-up agreements between the two countries would be utilized.
- It should be understood that a range of licensing options is possible under
this policy. For example, in the case of a pay-per-program or multi-channel
(other than simply multiplexed) undertaking the Commission could choose to authorize
a pre-existing foreign component which is intended primarily for foreign audiences,
within the licensed undertaking or separate from, but linked to, the licensed
undertaking. In either case, the Canadian component would be carried on Canadian
satellites while the foreign component could use either Canadian or foreign
satellites.
-
[Emphasis added]
At the time that this policy was adopted there were a number of key structural
differences in the provision of satellite services in Canada, most notably the
following:
- Telesat Canada ("Telesat") was the monopoly satellite carrier
within Canada.
- No dedicated Direct Broadcast Satellite ("DBS") satellite facilities
yet existed in Canada.
- Competitive Direct to Home ("DTH") services had not been licensed
to provide service within Canada.
- The market for fixed satellite services had not yet developed through digital
compression and there were a relatively small number of Canadian licensed
service providers who utilized satellite facilities for distribution of programming
services within Canada.
The satellite policy of 1995 is now more than eight years old and no longer
corresponds to current Canadian or international market conditions for the following
reasons:
- As part of its commitments under the General agreement on Trade in Services,
Canada agreed that, effective March 1, 2000, competition would be permitted
in the provision of both FSS and MSS satellite services. The Canadian government
through Industry Canada, has authorized, in addition to Telesat, more than
50 foreign fixed service satellites to provide service in Canada. As a result,
Telesat no longer has a monopoly in Canada.
- In the provision of DBS services, the Federal Communication Commission's
("FCC") International Bureau on May 7, 2003, granted the application
of Digital Broadband Applications Corp. ("DBAC") to provide direct
broadcast satellite (DBS) and two-way broadband data services in the U.S.
market using two Canadian DBS satellites and a U.S. fixed-satellite service
(FSS) satellite. While the FCC has previously approved FSS satellite transmissions
to the United States from Canadian satellites, DBAC's authorization is the
first authorization for DBS service from Canadian satellites. In granting
DBAC's application, the Commission declared that it hopes to stimulate competition
in the U.S. DBS and FSS markets, as well as reduce prices and stimulate further
technological innovation.
DBAC's proposed network consists of one hub earth station, located in Arizona,
and one million home terminals that will access the Canadian Nimiq and Nimiq
2 (Telesat - Nimiq) DBS satellites (to be located at 82° and 91° W,
respectively) and the U.S.-licensed FSS satellite, Galaxy 11.
The opening of the U.S. DBS market to services beamed from Canadian Direct
Broadcast satellites marks a significant change in U.S. satellite policy.
We believe that this event should be a catalyst for reciprocal action in respect
of SDARS service to Canadians from a U.S. broadcast satellite.
- Although Telesat Canada no longer enjoys a monopoly in the provision of
Fixed Satellite Services in Canada, it is the sole provider of direct-to-home
broadcast services using DBS-band satellite facilities. Nonetheless Telesat
supports this application for the use of U.S. SDARS space segment for a number
of reasons that are specified in the application and summarized below:
- (a) SDARS orbital slots have not been allocated to Canada;
- (b) Construction of an SDARS or SADU satellite fleet dedicated to the Canadian
domestic market would be prohibitively expensive at this time, and no existing
or planned Canadian space facilities can be adapted for SDARS service;
- (c) Even if regulatory and satellite coordination approvals were obtainable,
construction and operational launch of an SDARS satellite fleet cannot be
accomplished prior to 2010. Grey market services would proliferate in the
Canadian marketplace prior to that date if no Canadian company were authorized
to offer SDARS service;
- (d) Telesat currently operates spacecraft tracking and control facilities
for XM Satellite Radio Inc. Integration of a Canadian SADU provider's service
on the XM Satellite platform would further benefit Telesat's long-term international
and domestic business interests;
- (e) Telesat's engineering expertise would be utilized in respect of ground-repeater
stations in Canada, thus providing Telesat with additional revenue sources
from a Canadian user, which is commensurate with the national satellite policy
of using Canadian resources, wherever possible.
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