If the latest events in the never-ending tale of the Canadian direct-to-home satellite industry are any indication, compromising Canadian cultural policy has become a necessary part of the process of getting a homegrown dth service in the air.

With July 15 looms the scheduled (but not guaranteed) arrival of the fcc’s ruling on Telesat Canada’s deal with tci and TelQuest. For a brief, shining moment, Anik E1 maimed, ExpressVu transponderless, Telesat’s arrangement with John Malone and company seemed the beginning of the end of this saga which continues to leave Canada services without an alternate distribution system.

But this month’s rare request to the fcc from the u.s. departments of State, Justice, Commerce and the Trade Office that the fcc hold off ruling on the Telesat/tci proposal while reciprocal access is defined and debated has refueled the whole cultural protectionist policy debate. The Clinton administration, four months before the presidential election, is blistering about ‘discriminatory’ Canadian regulations, with Telesat agreeing that changes in policy are necessary, but only on the hardware side.

The Clinton administration letter tagged the required 50% Cancon on Canadian dth services as an issue and rattled about government-sanctioned ‘extensive’ content restrictions, wording that left many north of the border initially concerned that content quotas could somehow be a casualty of the dth dealings.

But a week later, post some ‘inspiring’ public words from Industry on standing behind quota policy, some concern has shifted to confidence that the policy kerfuffle at hand will be restricted to the hardware arena.

However, Andre Bureau, president and ceo of Astral Broadcasting Group, says the landing rights the u.s. are requesting present a very real rights market threat.

‘If the Americans have landing rights they would go out and buy the rights and exclude us from owning these rights, so at the end of the day, this reciprocity thing is a very dangerous development. It means finally the Americans would control everything and we will not have a chance to own these rights for the Canadian market.’

Telesat stoked the fire with a letter to Industry Minister John Manley requesting Ottawa ‘review’ Canadian satellite policy, but Telesat spokesperson Paul Bush stresses that changes to content or the way programs are licensed and distributed in this country aren’t part of the agenda.

‘Let’s be very clear on this: we’re talking about the facilities. The transponders. What rides on them is subject to regulations on both sides of the border. We’re not suggesting policy on distribution or programming be changed an iota.

‘All that’s happening is the large competitors in the States are rallying to hold off more competition as long as possible. They’re trying to invoke some of the same issues on the content side that have been around for the last 30 years and will be for the next 30, but it’s just not negotiable.’

Washington, d.c.-based Scott Blake Harris, a former head of the fcc’s international bureau, now a partner at Gibson, Dunn & Crutchler llp in Washington, says despite the letter from the u.s. government, content issues are peripheral to the structural changes in policy being contemplated. In terms of specific changes in regulation on the content side, none have been requested, he points out.

‘There is no proposal of any kind on the table. The content issue is off to the side, first, because owning a u.s. satellite dish is prohibited, and second, because you have rules about content, so even if we were allowed to come into the market, that access would be de facto illusory rather than real.’

But having said that, clearly the program rights issue is going to come to a head, with Blake Harris stipulating that reciprocity extends beyond hardware supply for the American contingent.

‘If Telesat can reach 280 million people because they can service Canada and the u.s. and DirecTv can only reach 250 million because they’re shut out of Canada, that’s a competitive disadvantage. This is a competition, not a trade issue.’

The fact is that if Ottawa doesn’t budge on regulations that stipulate only Canadian satellites may service Canada, how the continental dth industry will play out is clear, he concludes.

‘I’ll tell you what’s going to happen. The Mexicans are going to open up their market, without burdensome content restrictions, and Mexico will be available to the u.s., the u.s. to Mexico, and the Canadian service will be nowhere whatsoever.

‘It’s unfortunate, but if the Canadian government decides to have these rules and regulations, they’ll have to pay the price and they’ll be paying it now. You’ll never have a dbs service because the Canadian market alone won’t sustain it. You need access to the u.s. market and that won’t happen unless we have the same.’

For its part, Telesat readily admits a Canadian service is now dependent on a u.s. partnership for its $1.6 billion satellite launch, but Bush says the status quo can’t be interpreted as the u.s. having disproportionate leverage to request landmark policy changes.

‘There are several other companies besides tci that would like to get into the business. Their slots are full. On the other hand, Canada has four orbital slots which are able to reach the continental u.s. and cover Canada. Partnerships make sense for everyone.’

But Bureau warns that Industry must look to the long-term needs of the Canadian market before contemplating bartering prize Canadian-owned satellite slots.

‘We have Canadian slots which are very valuable. Before we let these slots go to the Americans, we should make sure we keep enough slots for all of Canada’s needs, whether they are immediate needs, future needs or backup needs. I think this is very important. We’ve seen what happens when we lose a satellite or half the power of a satellite. All of a sudden we’ve realized we have no backup or capacity to do anything.’

Meanwhile, back at the ranch, a host of other political wranglings play out. Ownership of orbital slots 91 and 82 has yet to be decided by Industry, and although Telesat maintains it has an agreement in principal for the prime parking spots, Shaw Communications and Power DirecTv have reportedly applied for ownership rights.

Industry is mum on when an announcement will be made, but Telesat needs a yea from both Industry and the fcc by the end of August in order to launch its first satellite into the 82-degree orbital slot on schedule, Nov. 2. The second is scheduled to launch into 91 the first week of February 1997. That could leave ExpressVu potentially up by the spring, with testing planned on the 82-degree bird before the end of the year.

ExpressVu made an appearance at the licensing hearing last week for Star Choice Television Network, which is partnering with EchoStar Communications in Colorado and could beam down within four months of a licence, a potential January launch. ExpressVu claims EchoStar could occupy satellite space which ExpressVu claims the rights to, and is attempting to launch a service based on a flawed business plan.

Power DirecTv could beat them both to the launch, making noises last month that it could re-enter the market. Shaw, also pitching to launch a dbs service, will go to licensing hearings in the fall.