Last October it was first disclosed that many of the terrestrial repeater stations used to boost the coverage footprint of the XM satellite radio network were operating without FCC approval. Recently XM filed a document with the Securities and Exchange Commission which seems to suggest the pirate nature of the network is more egregious than first confessed. Up to one-third of the company’s 800 repeater-stations are either placed in locations not approved by the FCC, operating at power levels well above those approved by the FCC, and several are on the air without FCC approval for their placement at all. The scope of such flaunting of the rules is unheard of: some of these illicit repeaters are operating with more than 40 kilowatts of power.
What’s more, it’s clear that XM had an economic incentive to break the law: the majority of its illicit repeaters serve the largest markets. More than half of those placed in the Los Angeles market, for example, are operating “at variance” from what they were authorized for. As a whole, according to XM’s own estimation, the 200+ rogue repeaters serve approximately 42 percent of its network’s total coverage footprint.
According to other FCC documents, the Special Temporary Authority (STA) issued by the FCC that allows XM to run its terrestrial repeater-network has also expired, and has been expired for several months. Thus the entire XM terrestrial network currently operates without any formal federal approval. There is a long history of dialogue between the FCC, XM, and other interested parties over this issue, but as far as the rules are concerned XM’s entire network is for all intents and purposes unlicensed.
XM is not alone in running a partially pirate radio network: Sirius satellite radio chief Mel Karmazin reportedly told Congress earlier this year that 11 of his 138 terrestrial repeater stations were also operating outside the law, but they’ve since been shut down. It is unclear whether the Special Temporary Authority to operate the remaining Sirius repeaters has expired as well.
XM CEO Hugh Panero told a conference call of institutional investors on February 26 that he doesn’t think any of this will be big deal:
Understand neither the Company nor any regulator wants to do things that hurt consumers or consumers listening experiences or other things like that….It is also important to remember on the repeater issue that, in fact, while there clearly were mistakes or administrative problems on that, the actual repeater network itself is not causing harm or interference into any other party, and in fact, the network, which was built was actually less powerful and much smaller than the network that was authorized by the FCC.
This should not, however, have any bearing on the company being held liable for its network-wide violations. Just imagine Clear Channel moving and juicing the power of 100 of its stations in the largest markets without FCC authorization, and then telling the agency, “Well, just a fraction of our stations operate ‘at variance’ – if you look at the other 800 stations we own and operate legally, you can see there’s no problem here.”
When it comes to interference potential, the case against XM is further damning: the frequencies on which XM operates its repeaters is very close to the frequencies used by cell phones to provide user-location information. Could you imagine someone having a bad accident near an illegal XM repeater outpost and emergency services not being able to pinpoint the location of the victim due to interference from the “XM Nation”?
All of these revelations come on heels of XM and Sirius announcing their intent to merge. It’s hard to see how the FCC could give approval to two companies who’ve essentially engaged in more piracy than every unlicensed AM/FM/SW broadcaster that’s ever taken to the airwaves throughout U.S. history – on both the transmission and reception side of the air chain. Unfortunately, knowing how the FCC works, chances are both companies will come out of it with slaps on their wrists and the violations may never be fully addressed. In fact, XM says it’s already in consent-decree negotiations with the FCC to sweep these matters under the proverbial rug.
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