Interoperable XM/Sirius Radios Would Unite Programming Without Merging Companies
LONG BEACH, Cal. -- A merger may not be on the horizon for XM and Sirius, despite persistent rumors, but an interoperable radio might remove the need for a combination, industry lawyers and financiers said at the International Satellite & Communications Expo here.
Panelists said consumers won’t see interoperable radios soon. The FCC required development of an interoperable radio when it granted the companies their licenses but set no deadline. XM and Sirius are in no hurry to produce such devices because they would make it easier for customers, acquired at great cost, to switch providers, panelists said. XM and Sirius have told the FCC they're working on a prototype, “but I don’t see them moving too far down this road unless there’s a real stick behind them,” said Armand Musey, partner at Near Earth. The timing is still vague because the consumer demand for an interoperable radio hasn’t been as loud as expected, said attorney Patrick Campbell, “If you really get consumers going to the FCC and pushing it, you'll get it, but I don’t sense any urgency there so far,” Campbell said: “But I do think that if it gets to the point where the companies stop talking, the FCC will get involved.”
Attorney Steve Coran speculated the Commission will be reluctant to impose an interoperability schedule because they know the market is a better regulator of a hardware rollout. In a separate panel, Rick Lee, General Motors vp-satellite radio services and OnStar, agreed price will decide the fate of interoperability: “For an interoperable set of hardware to be relevant to the consuming public, you're going to have to offer it up at a price that is similar to a single mode satellite radio, and that’s going to be hard to do.” The cost of an interoperable satellite radio today would be twice as much as a single mode satellite radio, and “I don’t know about the viability of that,” said Stan Kozlowski, Sirius senior vp-national retailing. The companies engineers dedicated to the project, he said: “I know an [interoperable radio] will come, but I don’t know when… There really isn’t a good answer right now.”
Musey speculated that a “tiered” service option could come whenever interoperable XM/Sirius radios arrive. “Apollo owns stakes in both companies, so if there is a way to put them together, they're going to find a way to do it,” Musey said. One service could be sold as a base package and the other added as a premium option, then the companies “could be merged financially without it having to happen legally,” he said. Campbell agreed: “It doesn’t make sense for the companies to have these exclusive content arrangements if they can’t reach a huge number of customers with them. If they could create a package where you could get the content from both companies, it would negate the need for a merger.” But if XM and Sirius did seek to merge, permission from the FCC “wouldn’t be unthinkable” if “you could make the argument that it wouldn’t adversely effect customers,” Campbell speculated. -- Adrianne Kroepsch
ISCe Notebook…
It will be 4-5 years before a viable business case can be made for 4.5 degrees or “tweener” spacing for DBS satellites, said Michael Agostinelli, vp-Americom2Home Broadband Development for SES Americom. Speaking at an ISCe DBS panel, Agostinelli said SES still is “pursuing the spectrum.” The FCC is initiating a rulemaking because SES Americom, EchoStar and DirecTV can’t agree whether an orbital spacing reduction would cause harmful interference, and the rulemaking could take 1-2 more years, Agostinelli predicted. The orbital slot in question is at 105.5 degrees W, 4.5 degrees between the 101 degrees and 110 degrees BSS positions instead of the traditional 9 degrees. “Operating in between should not cause undue interference at either of the primary orbital positions, and we feel technically it would be acceptable,” Agostinelli said: “Our customers feel differently.” DirecTV and EchoStar each have about a million legacy dishes potentially susceptible to interference by a satellite operating at 105.5 degrees. “We believe that with the migration and expansion to new markets already planned, that they could manage this legacy the same way that they're going to manage their MPEG-2 to MPEG-4, and we could be in the shape where we could provide more and compete more effectively with the real competition -- cable,” he said. -- AK
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WorldSpace will follow XM and Sirius, targeting the vehicle market - but in India and the Middle East, said Srinivasan Rangarajan, WorldSpace senior vp-engineering solutions. “What XM is to the U.S., WorldSpace is to the rest of the world,” said Rangarajan at an ISCe satellite radio panel. The international satellite radio company, with an IPO impending, so far has been a fixed satellite radio operator. But the company “wants to catch up” with the mobile satellite radio trend, targeting vehicles “as quickly as possible,” said Rangarajan. He said car receivers are being beta tested, with a contract to develop a ground repeater system in the works. WorldSpace is targeting car makers in India and the Middle East, he said. The success of Sirius and XM in the U.S. has helped WorldSpace to promote itself abroad, said Rangarajan. WorldSpace has 2 satellites in orbit covering all of Africa and Asia -- including India, China and the Middle East. A 3rd satellite, not yet launched, would cover Central and S. America. Rangarajan said WorldSpace also plans to get into “the IP world” and data multicasting: “This has been pretty interesting and we have been looking at the federal market for this purpose and there are some very interesting applications where information can be sent across to closed user groups.”