IT’S HARD TO IMAGINE THE CRTC undertaking a review of the radio industry at this particular point in time.
So much technological change. So much undecided. Such an unsettled market. And really, so much still working really well, too. Do a search on www.cartt.ca for the major Canadian radio companies and you’ll mostly find a story of an industry awash in strong revenues and profits.
But, the CRTC is on record saying it wants to review Canadian radio policy beginning this fall. It’s even been suggested that Canadian content levels should rise from the current 35% to 40% with the next policy review.
But last week, as first reported by www.cartt.ca, the Canadian Association of Broadcasters asked for a delay of up to 36 months so that the Canadian industry can figure out just what audio consumers might do to the radio market, given the existing and new technologies available to them, including satellite radio – just in time for Christmas.
What follows is an edited transcript of a chat between cartt.ca editor and publisher Greg O’Brien and David Keeble, senior vice-president, policy and regulatory affairs of the Canadian Association of Broadcasters, as he hashes out the CAB position a bit more.
Greg O’Brien: Let’s back up a little bit. Why had the radio review been postponed this long in the first place? This is something that’s sort of been bumped along the agenda for a while.
David Keeble: I wasn’t in this job while all that was happening, but my impression is that people felt it wasn’t necessary. Nothing seemed to be urgent enough to actually go ahead and do the review.
GOB: But, the rumblings for a while have been that a radio review would happen, so what are the reasons why the CAB believes this review isn’t required or necessary at this time?
DK: There are two different questions there. In our view, it isn’t really necessary because, in essence, the system is working. The Canadian talent development contributions are adequate to what is being required from FACTOR (Foundation to Assist Canadian Talent on Records) and Musique Action and our contributions to Starmaker and Fonds Radio Star have achieved good success.
The new contributions that are going to come from the newly licensed satellite radio players will ensure the amount of funding is certainly adequate for the needs for the music industry in terms of talent development.
On the Canadian content side, the 35% Cancon and the French vocal music requirements seem to be meeting the needs of the music industry but they’re better to comment on that than we are.
The essence of this, Greg, is simply that it looks as if the system is working the way it is right now in terms of the relationship with the music industry and in terms of the provision of local content and the other kinds of things the Commission is looking for.
Now, why it’s the wrong time, is the second question.
GOB: Yes.
DK: I don’t know if you followed or reported on the news out of Philadelphia on their plan to put Wi-Fi right across the city. It’s been in the works for quite a while where they’ll provide broadband wireless access almost the same way they would provide roads or any other kind of infrastructure for its citizens. They think it’s become almost an essential that this be provided and it’s going to be rolled out across the entire city…
If you look at something like that and ask yourself, “what does that mean to media, generally?” It means that broadband radio in that city is going to be a real feature. If people take advantage of that infrastructure to build portable devices that can access not just data and not just Internet but also the streaming audio that’s on the Internet, then what you’ve got is broadband radio available to the entire population.
So, looking at that single event, if you were trying to create a regulatory system for radio in Philadelphia, what would you do? What would you do with the regulatory system for the commercial radio operators operating in that environment?
Frankly, we don’t have the answers.
We look at that and say, radio needs some kind of digital response, but we don’t know what it is. The Eureka 147 system that is the official Canadian standard is an excellent technology but there are no receivers in the marketplace. Consumers can’t actually hear the transmissions that radio broadcasters are putting out.
GOB: That’s the DAB technical option in Canada, right?
DK: Yes, but people use the term DAB for a number of different things, so I tend to call it the Eureka 147, which is the exact name. You get people in the States calling HD radio, which is their system, DAB sometimes, too.
GOB: Digital radio in Canada has basically stopped rolling out though, correct? It’s under the CAB’s purview right now?
DK: It’s not really the CAB’s purview, it’s more the stations’. The Commission has a policy on digital radio transition, which has not been revisited in a while – largely because people don’t see what the future holds clearly enough to understand how they’re going to respond.
So, if you take those two things together, you say to yourself, “there’s a new competitive marketplace for radio and it’s changing faster than we could have ever imagined.” Virtually daily or weekly, we’re getting these new announcements that suggest new people are going to enter the business of providing audio and providing music to the population at large – and they are competitors to commercial radio.
But, the situation is in so much flux you can’t sit back and say “we’ve got the answer and it’s this” or “we think the regulations should be something else.” It’s really almost impossible to know at this particular point in time what’s going to happen and what the response needs to be – and what then can be expected from commercial radio in terms of its regulation and its obligations and commitments.
GOB: When (Corus CEO John Cassaday spoke) recently he talked about how Corus stayed on the sidelines during the satellite radio battle and how they think the future is what you’ve mentioned here – WiMax or Wi-Fi – where you’ll be able to deliver radio signals over the Internet to small devices (be they phones or other hand-helds).
DK: That’s right. There are people who say satellite is going to be the big competitor for commercial radio. Certainly when you go down into the United States, you find the radio broadcasters there are very concerned about satellite radio and then you have others who say, it’s wireless Internet or broadband radio that’s going to be the true competitor.
What we’re going through right now, to me, is almost like the period during the tech boom, where you had announcements of new technologies coming out practically on a weekly basis. Then there was a period of quiet following the tech crash. But now we’re getting the same kind of flood of announcements. The difference this time is that these are not vapour-ware, these are actually rollouts. It’s not something where someone will have a tremendous business plan in 10 years, it’s something right around the corner.
And at the same time, it’s so variable and changing so quickly that to stand back from it and say, “we know how the future is going to play out and therefore we know how to regulate and how to manage,” just isn’t true.
GOB: To take the automotive market for instance, not only is satellite equipment being installed in cars, some have MP3 players now and it’s not hard to imagine people downloading things to their cars on a regular basis or listening to an Internet stream as they drive around.
DK: You can go through the technology pages of the newspaper or just walk through Future Shop and you can see the kinds of things that are changing the media marketplace…
The current regulatory system works well for the model we’ve got now. Creating a new regulatory system or discussing the regulatory system – including, conceivably, a new digital radio strategy which will probably be part of the review – in terms of constructing that for the next five or seven years, we’re in such a state of flux that it seems to us to be the wrong time to attempt that sort of discussion.
That’s not to say there ever is an ideal time to attempt that discussion, but our perception and the perception of many people is that there’s so much going on right now that this is not the right time to try at all.
GOB: What made you pick the 24 to 36 month time line?
DK: In part, it’s because if you look at the digital radio question, one of the issues is what the Americans are doing. They adopted a different approach than Canada did. Instead of the Eureka 147 system, they developed over a long period of time a system now branded HD Radio. And, many radio broadcasters in the States are very interested in that and it’s potential.
The difficulty is that if you look at it right now, it’s having the same problems that the Eureka 147 rollout had in Canada, which is that the radio broadcasters are putting up the signals but the receivers are not in the marketplace.
So, the reason for picking that time frame is we think that if you go through this next holiday buying period and the next consumer electronics show in January, you’ll begin to see whether there’s manufacturer support for that system. Then the following holiday buying period will let us know if it looks like there’ll be consumer take-up and if this is then an option we should consider for Canada in place of what we have – or if we should stay with what we have.
That 24 to 36 month period will give us a chance to look at the impact of a number of different factors in the equation: the rollout of digital radio; the take-up of satellite radio because I don’t know how much impact you’ll see here in that period of time.
GOB: With all that’s going on in this space, that you’ve discussed, are we headed down a path where broadcasting is going to be completely de-regulated, save for maybe some Cancon requirements?
DK: There’s a lot of speculation involved in that. I don’t think that’s likely but I guess there are people in the industry – not so much on the broadcasting side, but on the distributor side – who certainly are pushing for lower regulations.
It’s a question, I suppose, that has to be asked, but it’s not something we’re foreseeing at the moment.
GOB: Are you hopeful of getting an answer from the Commission on this at or before the CAB Convention
DK: I’d say we’re hopeful of that, yes.
