SATELLITE DARS FIRMS PROGRESSING ON INTEROPERABILITY
Interim step toward making rival XM Satellite and Sirius Satellite Radio digital audio radio services (DARS) systems interoperable could be achieved by early next year, although full- scale integration won’t occur for 4-5 years, Sirius CEO David Margolese told us. In interview at C.E. Unterberg, Towbin conference in N.Y.C., he said vehicles would be prewired for DARS reception and device would be installed in trunk to accept either Sirius or XM receiver. Interim step, which moves companies part way toward satisfying FCC mandate that competing DARS service be interoperable, is required under OEM agreements with Audi, Honda, Nissan and Toyota, Margolese said. However, XM spokeswoman said interim step wasn’t part of OEM pacts, but rather was “solution” companies were developing as bridge to integrated product. Full integration will require dual chipset, industry sources said.
XM Satellite CEO Hugh Panero confirmed that interim step was in works, but declined comment on availability. While DARS companies move toward interoperability, they're racing to deliver competing first-generation models. STMicroelectronics has completed development of 2 of XM’s 3 receiver chipsets, with 3rd due by April, Panero said. Margolese said Sirius wasn’t expected to have “first cut” of chipset being built by Lucent Technologies until March, with final version not expected to reach manufacturers until 3rd quarter. Lucent had been expected to complete chipset last year.
To meet planned midsummer debut of service, Sirius will use discrete chipset, built by Matsushita with off-the-shelf components, to enable shipment of 10,000-50,000 units, sources said. In addition to Matsushita, Sirius has used AVT to supply chipsets. Use of discrete chipset could add $150 cost on top of $150 premium that will be charged for radio with DARs capabilities, UT Vp William Kidd said. Matsushita officials weren’t available for comment.
XM said postponement of launch of first satellite to Feb. 28 from Jan. 8 would delay start of service only 30-45 days. Its 2nd satellite is expected to fly by late April. Sirius has launched 3 satellites and expects to have spare completed by Aug. and available by Oct.
Still unclear is exact pricing for DARS receivers. XM models are expected to be in $245-$400 range, but Sirius hasn’t released pricing. Much will depend on subsidies being supplied by auto manufacturers that are projected at $47 million in first year, UT said. DARS receivers are being designed into automakers’ 2002 line-ups. Over long term, XM projected that 9% of revenue would be derived from OEM deals with GM, Honda, Suzuki. Margolese forecast that 15% of Sirius “blended” overall revenue would be returned to auto makers. In addition, Sirius expects to pay 6% royalty for music used in service, he said.
Wild card could be DirecTV’s investment in XM. At outset, Panero said DirecTV would provide XM with back-office support, but alliance later would involve marketing service to DirecTV’s customers and eventually integrating it into set-top receiver. Interim step could be adding “clip-on” antenna to DirecTV receiver that would enable user to gain access to DARS service, he said. Also being considered is providing “musical juke box,” said DirecTV Global Digital Media Pres. Lawrence Chapman, who declined to disclose details.