The CRTC opened Canadian skies to a potential revolution in broadcasting Thursday, with its approval of three licences for digital radio services. The services won't fly, however, unless they meet strict Canadian content standards.

"These decisions foster the objectives of the Broadcasting Act and balance the interests of Canadian consumers, the radio industry and the music industry," CRTC Chairman Charles Dalfen said in a statement Thursday.

Pay radio, a developing industry south of the border, offers subscribers CD-quality programming beamed directly to their specially-designed receivers. Aside from its high fidelity, proponents of the service tout its ability to reach listeners in remote locations, out of reach of regular radio signals.

All that comes at a price, of course. The service is expected to cost between $10 and $13 a month, with a minimum $100 price tag on the radio receiver.

In its decision, the Canadian Radio-television and Telecommunications Commission gave the go-ahead to one ground-based and two satellite-based services, but only if they adhere to strict content guidelines.

The conditions placed on the two newly-licensed satellite radio services include:

• At least eight original channels produced in Canada, 25 per cent of which must be in the French language
• A maximum ratio of nine foreign channels to each Canadian one,
• At least 85 per cent of the musical selections and spoken word programming broadcast on the Canadian channels must be Canadian
• At least 25 per cent of the musical selections on the Canadian channels must be new Canadian musical selections
• A further 25 per cent of the selections must be by emerging Canadian artists
• At least 5 per cent of their gross annual revenues to initiatives for the development of Canadian talent

Of the two satellite services, one was proposed by Sirius Canada Inc., a consortium involving the CBC, Standard Radio, and U.S.-based Sirius Satellite Radio.

The other is backed by Canadian Satellite Radio, a partnership with Washington-based XM Satellite Radio Holdings owned by Toronto entrepreneur John Bitove Jr.

The third proposal, brought by CHUM and Montreal-based Astral Media, was for a digital radio service using land-based transmitters.

Unlike its space-based competition, the ground-based service was given the green light for 50 Canadian channels, with 20 per cent in French.

In terms of content, it will have to ensure that 35 per cent of the English-language stations' popular music is Canadian, while the service as a whole will have to contribute two per cent of gross revenues to developing new homegrown talent.

Appeal possible

While the CRTC raised the bar for Canadian content, the main satellite players say they should be able to live with the demands.

"If you believe that competition is good, it's a good decision that the CRTC made," Bitove Jr. said, appearing on CTV Newsnet's Countdown with Mike Duffy Thursday night.

"I think we've got our work cut out to see if we can get XM aligned with us on these new requirements."

However, a spokesperson for the lobby group Friends of Canadian Broadcasting said the CRTC should not have approved all three proposals.

The group supported the CHUM bid and is worried it will die because of competition from the other American-allied proposals.

The group will be meeting with other arts organizations to consider appealing the decision.

While CHUM Radio Executive Vice President Paul Ski admits he was disappointed by the decisions, he is "not sure if there should be an appeal."

Ski said, appearing on Countdown, that the CRTC's ruling makes it difficult for "those of us who are thinking of launching subscription radio in Canada."

Analysts say that Canada, with its many remote communities beyond the reach of conventional radio stations, is a natural market for satellite radio.

The death of traditional radio?

With the prospect of listening to any kind of music without the interruption of advertisements and DJs, digital radio is expected to offer some fierce competition to Canada's slate of small AM and FM radio stations.

John Hayes, president of Corus Radio, one of the country's largest radio broadcasters, notes that satellite radio cannot deliver local news, weather and sports.

He says conventional radio is doing fine, noting that last year industry revenues were up by between two and 2½ per cent and that this year looks even better.

Jeff Vidler, partner at Solutions Research Group dismissed claims from critics who say the decision means the end of radio as we know it.

"Some people say satellite radio will mean the death of traditional radio -- not necessarily. It means another chapter in radio," Vidler said, appearing on CTV Newsnet.

"There was AM radio, FM radio, and now satellite radio."

CJLS Yarmouth radio station co-owner Chris Perry isn't worried either.

"Local radio stations were destined to die when the eight-track came out, and then the cassette, and then the CD, and now digital radio," Perry said, appearing on Countdown.

"I see local land-based radio stations surviving well into the next century."

Prepared with reports from CTV News