XM Satellite Radio says it has no plans to offer local radio programming to its customers, but the National Association of Broadcasters last week discovered that the company has received a patent to do just that.
The discovery confirmed for NAB its worst fears: that XM is looking to horn in on local radio broadcasters' local advertising businesses.
In a letter to FCC Chairman Michael Powell, three FCC commissioners and three bureau chiefs, NAB general counsel Jack Goodman last week urged the commission to disallow XM from using this patent to deliver local programming.
"While XM was telling the Commission that it had no plans to use repeaters other than to fill gaps," Goodman wrote, "it was actively developing technology specifically intended to use repeaters to provide locally differentiated material."
NAB President Eddie Fritts said the revelation shows that the FCC must "put a halt to this ruse of a terrestrial repeater network."
XM Satellite Radio has been mounting hundreds of terrestrial radio repeaters all over the country, saying they are needed to fill gaps in XM's satellite-delivered digital radio service and nothing more. Meanwhile, NAB has been asking the FCC for rules that specifically forbid XM from transmitting any local radio programming. The FCC is still taking comments and has yet to issue final rules on how the repeaters are to be used. A spokesman said the FCC does not comment on ongoing proceedings.
On Feb. 12, the federal government approved an XM patent that would allow the company to insert a code into some of its satellite-radio streams to alert the receiver to pick up and transmit local content. A copy of the patent was included in NAB's filing to the FCC.
Though readily admitting that it won the patent, the company denies it plans to use its new repeater network for anything other than filling in transmission gaps.
"The NAB is demanding something that we agree with and that we have consistently agreed with going all the way back to 1997," says XM spokesman Charles Robbins. "We are strictly a national satellite-radio service. Coming up with patents is what scientists do; when they discover something, they patent it."
Robbins said XM scientists came up with the technology by chance while trying to develop other procedures.
But broadcasters don't buy the argument.
Radio broadcaster Bill O'Shaughnessy—who has been fighting hard against XM's attempts to place terrestrial repeaters in Westchester County, N.Y.— said that, if satellite-radio companies begin to offer local programming, it "could unquestionably have a devastating impact on free over-the-air traditional broadcasting as we know it."
XM Satellite Radio launched last September and began offering nationwide service last November. As of January, the company had signed up 30,000 customers, according to CEO Hugh Panero, more than meeting its initial sales targets. To increase its market share, XM has a deal with General Motors, which, beginning this fall, will offer several models with an option for consumers to purchase XM receiver equipment and then subscribe to the programming service for about $10 a month.
XM's only competitor, Sirius Satellite Radio, launched in four markets in February—Denver, Houston, Phoenix and Jackson, Miss.—and plans to slowly roll out a nationwide service over this year.