Thousands of music lovers have discovered commercial-free U.S. satellite
radio stations, leaving Canadian companies - and the CRTC - scrambling to
catch up

Paul Brent
Financial Post

http://www.canada.com/national/natio...3-3e2f11515232

Saturday, September 25, 2004

Nearly two years ago, Karen Pace found religion. And like a true believer,
she's been spreading the message ever since.

Ms. Pace, 38, a Toronto music publicist, is an apostle for Washington-based
XM Satellite Radio, the world's largest satellite radio service, whose beams
sweep across Canada unimpeded by the country's broadcasting regulators.

"I have personally signed up 14 of my friends," she says. "I wish everybody
had an XM radio. I wish for Christmas I could afford to buy everyone I know
an XM radio."

Ms. Pace is not your typical music lover. She listens to satellite-delivered
music 40 to 50 hours a week, in her car driving to New York or Montreal on
business, as well as on a portable radio in her home and cottage, all for
the subscription fee of US$10 a month. Her love of the digital-quality sound
and variety from 68 commercial-free music channels has also meant she has
largely abandoned commercial radio.

"Radio plays the same artists over, and over, and over," she said. "That is
not what radio used to be. It was when the large corporations took over
radio, and radio became about ad sales in the early to mid-'80s that we lost
content."

Ms. Pace and an estimated 20,000 to 30,000 other Canadians are "grey market"
participants, unauthorized if not illegal. They are not exactly the
regulatory scourge of those who take in U.S. satellite television satellite
signals -- yet. That is because the Canadian Radio-television and
Telecommunications Commission has yet to turn its full attention to the
matter.

In hearings this November it will be up to the broadcast regulator, a
lightning rod of controversy for ordering the shutdown of CHOI-FM in Quebec
City and the barring of Italy's state broadcaster RAI International, to
decide what to do about what appears to be the greatest threat to commercial
radio since the advent of television.

Satellite radio is the fastest consumer product to reach one million units
sold, its backers say, and is on track to hit 40 million subscribers by the
end of the decade. The U.S. firms already have deals with the world's major
automakers, which now offer satellite-ready radios from one of the services
in their cars. The decision seemed simple for the CRTC -- acknowledge
reality and let them in -- so much so that the commission issued a call last
year to have someone, anyone, propose a made-in-Canada alternative.
CHUM Ltd., a Canadian radio pioneer that operates 30 radio stations across
the country, heeded the CRTC's plea and has proposed a less-ambitious (and
less capital-intensive) system that will offer the same digital-quality
sound without the need for satellites. Not utilizing shiny steel birds
orbiting at 22,000 feet means CHUM will need to erect transmitters in major
urban centres and create and sell new digital receiver radios. Urban, young
and cheaper, it's a system that by its nature will not reach all Canadians.
Still, CHUM's late entry, and the announcement this week that Quebec-based
Astral Media Inc. will be a 19.9% partner in CHUM Subscription Radio, makes
the coming hearings worth watching.