Canadian Group's Satellite Broadcasting To Compete With US

A GROUP of Canadian television and telecom companies are tak ing aim at an American satellite system. For backup, they will have the regulatory arm of the Canadian federal government, which makes the rules for television broadcasting.

``Direct to Home'' satellite broadcasting (DTH Canada Inc.) will broadcast to individual homes via a 24-inch dish on the roof of a house or outside an apartment window. The satellite dish is connected by coaxial cable - the kind cable companies use - to a specially supplied descrambling box on top of the TV set.

The service is similar to Britain's Sky TV and to a service just started in the United States that could be beamed to Canada.

``This is a strong competitive response - not to our Canadian cable companies - but to the US direct-TV providers,'' says Gerry Vanderwel, a spokesman for BCE Inc., one of the partners in DTH Canada Inc.

The three companies involved are BCE Inc. of Montreal, the holding company for Bell Canada, the country's largest telephone company; Canadian Satellite Communications Inc. (Cancom) of Mississauga, Ontario, which distributes broadcasting signals by satellite to 2,300 cable systems in Canada; and WIC Western International Communications Inc., the biggest broadcaster in western Canada. The three partners appear to have the money and technical capability to get the service up and running by April 1995. The Canadian satellite, Anik E-1, is already in orbit with ``transponder'' space to spare.

The market is there. Although about 90 percent of urban Canada has cable TV - installed for clearer reception from TV stations on US borders - there are 3 million potential customers who do not subscribe to cable. Another 600,000 rural residences do not have access to cable TV.

``The satellite television service will offer a wide range of broadcasting and information services nationally,'' the consortium said in a joint statement. ``It will be a strong Canadian alternative to US direct broadcasting services expected to be available later this year.''

Although the competition, DirecTv Inc. of Los Angeles, is able to broadcast to Canada, the Canadian Radio-Television and Telecommunications Commission, the federal broadcast regulator, has warned broadcasters that if their programs are on the American satellite, then they cannot be carried by Canadian cable systems. That ruling gives the new company a better chance to battle the American competition. ``The CRTC has been encouraging DTH services, and they seem to be encouraging Canadian undertakings rather than foreign undertakings,'' says WIC lawyer, Jon Festinger.

The consortium marries some old enemies in a new partnership of convenience to compete with the American satellite service. ``The most interesting thing to me is the telephone companies getting involved in broadcasting,'' says a broadcasting consultant who asked that his name not be used because he works for some of the firms involved. ``It's akin to what the telephone companies are doing in the United States.''

``Cancom is doing the deal with the telephone company, but the Cancom is 19 [percent] or 20 percent owned by Rogers,'' the consultant adds. Rogers Communications is the largest cable TV operator in Canada and has always been opposed to telephone companies getting involved in TV programming.

``Direct to Home'' links the phone company to the cable company through the satellite company, which is partially owned by the biggest broadcaster in western Canada. ``This is that gray area,'' the consultant says. ``The conflicts are everywhere.''