Satellite-Use Policy to accommodate Broadcasting Services to the Canadian Public

September 26, 2005

Ms. Diane Rhéaume
Secretary General
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0N2

Dear Ms. Rhéaume:

This is in response to your letter concerning applications considered by the Canadian Radio-television and Telecommunications Commission (CRTC) to establish broadcasting undertakings to provide satellite digital radio services using non-Canadian facilities. Your letter raised the need for the government to clarify its policy regarding the use of Canadian satellites for the transmission of Canadian broadcasting services in Canada, and in particular, digital radio by satellite.

The 1995 satellite policy clarification was issued to the CRTC in the context of direct-to-home (DTH) satellite broadcasting distribution. The clarification was in response to a specific set of circumstances related to the availability of Canadian satellite facilities. The policy statement did not contemplate a situation where Canadian satellite facilities would not be available to accommodate a particular broadcasting service requirement.

In considering the CRTC's request, the government undertook a public consultation on proposed amendments to its policy. This public consultation provided an opportunity for all interested parties to provide their views on the proposed amendments and their potential impacts on the broadcasting system.

The government has considered the public comments received. It has also considered the uniqueness of the satellite facilities required to deliver digital satellite radio broadcasting services and the absence of Canadian satellite facilities. In addition, evidence was presented that the costs of establishing a stand-alone Canadian satellite radio broadcasting facility would be prohibitive and uneconomical given the size of the potential market. Finally, we have confirmed that Canada does not have the spectrum resources, nor could it obtain appropriate spectrum for the operation of a stand-alone Canadian satellite radio broadcasting facility in less than five to eight years.

On June 16, 2005, the CRTC approved all three subscription radio applications that were considered at a public hearing in November 2004. Two of the new services, SIRIUS Canada Inc. and Canadian Satellite Radio Inc. (CSR), will depend on the use of American satellites for their delivery. The other service (CHUM/Astral) will exclusively use terrestrial transmission facilities.

Five petitions were received by the Governor in Council. Three of the petitions challenged the CRTC's two satellite decisions and two were challenging all three CRTC decisions. On September 9, 2005, the government upheld the CRTC decisions. At that time, the government welcomed the requests by CSR and SIRIUS Canada for the CRTC to amend their licences to enhance their offering of Canadian and French-language programming.

It is after our careful review of the policy and taking into account the circumstances surrounding this case, that the government will modify its policy to allow only for the use of foreign specialized satellite facilities for the transmission of Canadian digital broadcasting satellite subscription radio services in Canada. For your information, a copy of the revised policy is enclosed.

Should you have any additional questions on this matter, please do not hesitate to contact us.

Sincerely,

Enclosure

ANNEX

Satellite-Use Policy to accommodate Broadcasting Services to the Canadian Public

September 26, 2005

The following is a revision of Canadian policy concerning the use of Canadian satellite facilities, as it applies to broadcasting undertakings.

In 1995, the Government of Canada clarified its satellite-use policy to the Canadian Radio-television and Telecommunications Commission (CRTC) in the context of direct-to-home (DTH) satellite broadcasting distribution. This policy was subsequently amended to reflect Canada's obligations made under the WTO Agreement on Basic Telecommunications regarding the transport of broadcasting services (Footnote 1). The policy did not contemplate situations where Canadian satellite(s) would not be available to accommodate a particular broadcasting service. In 2004, in response to a request from the CRTC, the government carried out a public consultation that proposed changes to the policy that would permit expanded use of foreign satellites in exceptional cases. The government is, herewith, modifying the satellite-use policy to permit the use of the foreign specialized satellite facilities for the transmission of Canadian broadcasting satellite radio services in Canada.

One of the policy objectives in Section 7 of the Telecommunications Act is: "to promote the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada". A long-standing application of this policy is to ensure the use of Canadian satellite facilities for Canadian programming provided by broadcasting undertakings and destined for Canadians.

A policy objective of the Broadcasting Act is that: "each broadcasting undertaking shall make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming, unless the nature of the service provided by the undertaking, such as specialized content or format or the use of languages other than French and English, renders that use impracticable, in which case the undertaking shall make the greatest practicable use of those resources".

In this context, where a Canadian broadcasting undertaking wishes to use foreign satellite facilities, the Canadian policy concerning the use of satellite facilities for direct reception of broadcasting services by the public should be interpreted as follows:

1. the undertaking should make use of Canadian satellite facilities to carry (i.e. 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 the CRTC;
   
   
2. in exceptional circumstances, where no Canadian satellite facilities are available to accommodate specialized satellite delivery of a digital satellite subscription radio service to the public, including vehicular reception, the use of foreign satellite facilities is permitted to provide Canadian programming services; and
   
   
3. in the case of emergencies leading to lack of availability of Canadian satellite facilities for broadcasting undertakings, back-up arrangements with foreign satellite operators could be utilized, on an interim basis, with appropriate authorization.
   
   

   Note: Specialized satellite delivery in the context of provision (ii) is meant to differentiate unique satellite transmission/reception, such as for vehicular reception, not achievable by conventional Canadian satellite facilities used for DTH, e.g. direct broadcast satellite and fixed satellite in the 12 GHz range.

This statement is a result of a collaboration between Industry Canada and Canadian Heritage, following a public consultation on proposed amendments to the policy. Effective September 26, 2005, it supersedes the clarification provided in Annex C of Industry Canada's Radio Systems Policy, RP-008, Policy Framework for the Provision of Fixed Satellite Service, December 4, 1998.

Footnote