[IP] Canadian Regulator Issues Pay Radio Decision
Begin forwarded message:
From: Michael Geist <mgeist@xxxxxxxxx>
Date: June 20, 2005 7:40:14 AM EDT
To: dave@xxxxxxxxxx
Subject: Canadian Regulator Issues Pay Radio Decision
Dave,
Last week Canada's broadcast regulator, the CRTC, issued its decision
involving the licensing of pay radio networks such as Sirius and XM
in the Canadian market. The Commission agreed to license all three
proposed networks, but has come under heavy criticism from those who
argue that they did not require enough Canadian content and those
argue that they demanded too much.
My weekly Law Bytes column, posted below, argues that the Canadian
regulator made the best of a bad hand and delivered a policy approach
that prioritizes Canadian artists by adapting Canadian content
requirements to emerging new technologies. The column applauds the
CRTC's decision to avoid the temptation of picking winners and its
rejection of the music industry's demand for anti-copying technologies.
The pay radio decision is at
http://www.crtc.gc.ca/eng/NEWS/RELEASES/2005/r050616.htm
Freely available hyperlinked version at
http://www.michaelgeist.ca/resc/html_bkup/june202005.html
Toronto Star (reg required) version at
<http://geistpayradiodecision.notlong.com/>
MG
RECONCILING CANADIAN CONTENT REQUIREMENTS IN THE AGE OF THE INTERNET
From policy decisions on Internet telephony to third language
television broadcasters, the Canadian Radio-television and
Telecommunications Commission has faced more than its fair share of
criticism in recent months. With last week's much anticipated pay
radio decision, the Commission was no doubt prepared for yet another
flurry of negative commentary.
Criticism did indeed rain down - within hours groups were claiming
that the decision ran counter to Canadian broadcasting law or that is
somehow threatened online music businesses. From my perspective,
however, the Commission made the best of a bad hand and delivered a
policy approach that prioritizes Canadian artists by adapting
Canadian content requirements to emerging new technologies.
The background to the decision was widely reported last week: the
CRTC was presented last fall with three competing proposals for pay
radio. The two satellite proposals were Canadianized versions of XM
and Sirius, existing U.S. services that have millions of subscribers
and are effectively already available to Canadians through the grey
market (some estimate that 100,000 Canadians subscribe to the U.S.
services). Their backers argued that it was impossible to add
Canadian content directly to existing channels but that if granted a
license, they would add several Canadian channels to meet adapted
Canadian content requirements. A third proposal, developed by CHUM
and Astral, took a different approach by promising far greater
Canadian content but with a terrestrial transmission approach that
would only serve a limited number of urban Canadian areas.
The CRTC approved modified versions of all three proposals. Most
notably, the satellite providers were set two minimums -- at least
eight Canadian channels (double the initial proposals) as well as a
minimum of one Canadian channel for every nine foreign channels.
Moreover, the CRTC created programming obligations to promote new
Canadian music and mandated contributions of five percent of gross
revenues toward Canadian talent development.
While the some groups claim the CRTC did not do enough to protect
Canadian content, it is important to recognize that the CRTC did not
find itself in a strong regulatory position on the pay radio issue.
The headlines may have trumpeted the arrival of satellite radio to
Canada, yet the reality is that it already exists here. If the
Commission loaded the license requirements with significantly larger
Canadian content requirements, there would be every reason to believe
that the U.S. services would have walked away from the market,
content to generate some revenue through a grey market that features
no mandated Canadian content.
Moreover, the CRTC thankfully avoided the temptation to intervene in
the competitive marketplace by trying to pick winners. Despite the
clamour of quick IPO's, pay radio is by no means a guaranteed
success. It faces stiff competition not only from free radio, but
also from webcasting, free and fee-based music download services, as
well as the growing popularity of podcasting. Given that challenging
economic environment, the CRTC sensibly avoided selecting one
proposal over another by leaving it to the market to determine how
many pay radio services the Canadian market would support.
The Commission also wisely decided to promote Canadian content by
encouraging its availability, rather than by locking it down.
Canadian musical artists lent their support to this approach last
fall, emphasizing the value of new distribution channels such as
satellite radio.
The CRTC could have set limitations on access by adopting the
Canadian Recording Industry Association's recommendation that
mandatory anti-copying technology accompany the introduction of the
pay radio services. CRIA argued that "latent in this technology are
very significant threats to creators of music." By siding with the
artists, the CRTC has paved the way for greater availability and
funding for new Canadian music.
In the long term, the most important aspect of the decision is that
the Commission set an important precedent on Canadian content
requirements that promises to extend its viability in an increasingly
complex communications environment. While critics argue that the
opposite is true - namely that the Commission has been rendered
redundant and that the reduction of Canadian content requirements
from 35 percent on conventional radio stations to the ten percent
found on satellite radio will lead to a stampede for lowering
Canadian content requirements in other media - this need not be the
case.
Rather, the CRTC has provided a textbook example of how it can still
use its limited policy levers to promote Canadian content. While
critics call for the elimination of Canadian content requirements,
the reality is that a completely open market in culture invariably
leads to the cheapest form of culture, which is typically U.S. in
origin given its efficiencies of scale. By mandating 326 hours each
day of Canadian content with a prioritization of new music and
artists not found on the music charts, the CRTC has followed the path
found in many other developed countries whose cultural policy is
designed to provide their own artists with the airplay that is a pre-
requisite for success.
Further, the decision should not result in a reduction of Canadian
content requirements in other media. The CRTC decision paves the way
for an adaptable approach, one that responds to emerging technologies
by avoiding "one size fits all" solutions. In the case of satellite
radio, setting a minimum number of channels was reasonably viewed as
the better approach to mandating content percentages.
In fact, much to the chagrin of Canadian content requirement critics,
the issue is bound to arise in a host of other emerging media. For
example, webcasting from large providers has experienced dramatic
growth in recent years and may soon face questions about Canadian
content requirements. Similarly, music download services, which are
fast becoming the industry's preferred retail delivery channel, may
also encounter pressure to meet Canadian content minimums.
While policy makers have been rightly reluctant to pursue such
regulations for fear that they would involve "regulating the
Internet", ignoring the Internet by neglecting to embrace its
remarkable potential risks rendering Canadian cultural policy
increasingly irrelevant.
The CRTC faced the same choice on pay radio. Given the option
between adaptation and irrelevance, the Commission chose to adapt its
approach and it is Canadian artists and consumers who are left as the
ultimate winners.
--
**********************************************************************
Professor Michael A. Geist
Canada Research Chair in Internet and E-commerce Law
University of Ottawa, Faculty of Law
57 Louis Pasteur St., Ottawa, Ontario, K1N 6N5
Tel: 613-562-5800, x3319 Fax: 613-562-5124
mgeist@xxxxxxxxx http://www.michaelgeist.ca
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