Last month, a consultant engineer hired by the National Association of Broadcasters filed comments with the FCC in opposition to the proposed merger of the Sirius and XM satellite radio networks. These comments stressed the unique transmission and reception infrastructure of each satellite system and pronounced them inherently incompatible. The consultant, Dennis Wallace, asserts (among other things) that the variation in the orbital paths of XM and Sirius satellites, combined with a host of differences involving how the networks encode and compress their digital signals for broadcast, makes each company’s distribution infrastructure nearly impossible to consolidate without “significant disruption” to satellite radio service more generally.
This assertion is belied by two fundamental facts. The first is that XM and Sirius do not serve their subscribers primarily via satellite; instead they use a network of ground-based repeater-transmitters. In most cases, XM/Sirius listeners are not listening to signals directly from space, but instead to a signal bounced from the ground to space and back down again, then rebroadcast from gear bolted to some rented space on a cell phone tower nearby. It doesn’t matter what the difference in XM and Sirius satellites’ orbital paths are – so long as one satellite can “see” the United States (and XM’s constellation is in geostationary orbit), the repeaters will be served, and hence the listeners.
The second fact is that interoperable XM/Sirius satellite radio receivers already exist, and may be more widespread than we realize. In testimony to the House Judiciary Committee’s Antitrust Task Force earlier this year, Sirius CEO Mel Karmazin told lawmakers that the companies had already developed an interoperable receiver, but have not mass-produced it because there was no market incentive to do so. In this sense, XM/Sirius are holding interoperability hostage as part of the merger negotiation process. Outside the Beltway, some have suggested that making an existing XM or Sirius receiver interoperable might not require much more than a tweak to its firmware.
What we have here is a case of the NAB playing fast and loose with technicalities in order to obfuscate the subject at hand. It was a strategy successfully executed to hamstring the creation of LPFM.
Even so, sometimes even the bad guys f*ck up and do some good: earlier this week the NAB filed a Freedom of Information Act request with the FCC for details on how it is handling its investigation into XM and Sirius’ willful and repeated use of overpowered and/or unlicensed terrestrial repeater-stations. The NAB claims that XM and Sirius’ unlawful behavior was condoned at the “executive and senior level,” and that the public interest compels disclosure of the FCC’s progress on the case. While the NAB has the right to harp on the fact that XM and Sirius were the proprietors of was essentially the largest pirate radio network in broadcast history, it’s disappointing to see that being raised as a sideshow to the merger issue.
Personally, I’m quite conflicted on the prospect of a satellite radio merger. I don’t like the idea of a single company dominating any market, but the nature of satellite radio, based on the amount of investment required to make it work, also exhibits tendencies toward natural monopoly. Neither company has turned a profit and won’t for the foreseeable future, so something’s gotta give. A critical condition for any merger will be who gets to keep what chunks of satellite spectrum, and whether some of it might be better repurposed to serve the public interest, since it’s clear neither company can do that on its own.
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