I want to commend members of the Antitrust Task Force for exploring the issues surrounding a government-sanctioned monopoly. I would like to make five points:
1. The national satellite-radio market currently is a two-company duopoly trying to become a government-sanctioned monopoly.
There are two companies [XM and Sirius] in the market for nationwide, multichannel mobile audio programming services. They are asking to become one company.
They want the power to set subscription rates without constraint from a competing service. They want to eliminate the need to compete with one another to acquire programming and talent.
2. Such a monopoly would violate FCC rules and precedent, congressional policy and antitrust principles.
The FCC specifically refused to sanction a monopoly when it established national satellite-radio service in 1997, saying licensing at least two providers will help ensure that subscription rates are competitive [and] provide for diversity of programming voices.
Ironically, the argument for competition came from Sirius. They said more players would have “compelling market-based incentives” to differentiate themselves from competitors [and that a merger] “would have serious anticompetitive repercussions.”
At the urgings of the parties, the FCC explicitly prohibited any such future merger of the two services.
3. This government-sanctioned monopoly would undermine audio-content competition, not enhance it.
A monopoly could use its national market power to force content providers like sports programmers to deal only with them. It could engage in anti-competitive behavior against local radio broadcasters.
4. XM and Sirius have a pattern of violating their FCC licenses and cannot be trusted with monopoly power.
Both companies certified 10 years ago that they would comply with an FCC rule to develop a device that works with both services. Still, today, no consumer device is available.
5. By their own admission, this merger is not necessary for their survival.
According to their own statements, XM and Sirius can continue without a merger—even if they are highly leveraged because of their free-spending ways. Which begs the question, why should bad business be rewarded with a government bailout?
Excerpts from testimony by National Association of Broadcasters President David Rehr last week to the House Judiciary Antitrust Task Force.