XM/Sirius: Interoperable Radios Weren’t Required

Sirius Satellite Radio, XM Satellite Radio Ask FCC to Reject Request for Investigation by Consumer Coalition for Competition in Satellite Radio
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Sirius Satellite Radio and XM Satellite Radio, the proposed merger of which has still not been ruled on by the Federal Communications Commission after more than one year -- asked the commission to reject a request by the Consumer Coalition for Competition in Satellite Radio (C3SR) for an FCC investigation into the companies.

The coalition asserted that XM and Sirius failed to produce interoperable radios as the FCC required in granting them the only two satellite licenses. The satellite companies said they were never required to manufacture or distribute such devices.

In a letter to the FCC, lawyers for XM and Sirius argued that the agency never required them to make the radio, only to design it. "The implementing rules and license conditions merely require the licensees to design an interoperable receiver. The commission left the decision to manufacture, import, distribute, deploy, market and sell interoperable radios to the private sector," they said.

XM and Sirius argued that they went even further than the FCC requirements, going so far as to build a prototype. They said they have not taken the "ultimate step" of marketing the radios because it would not make "economic sense." They subsidized the production of the radios and would have no assurance that they could make that money back in subscription fees, which would have been an "onerous commercial burden on two unprofitable companies."

Large portions of the XM/Sirius letter posted by the FCC were blacked out as "highly confidential," which prompted Sen. Sam Brownback (R-Kan.) to ask for an unredacted copy.

Brownback, a member of the Senate Judiciary Committee, wrote committee chairman Patrick Leahy asking him to get the copy. Brownback said the letter raises questions about "possible contradictions" with Sirius CEO Mel Karmazin's testimony to Congress about the merger.

"As Sirius demonstrated in a response filed at the FCC last Friday, there is no contradiction, and Sirius' testimony was completely accurate," Sirius spokesman Patrick Reilly told B&C. "The continuing actions of C3SR, which is funded by the National Association of Broadcasters, is another example of our broadcast competitors' willingness to say and do anything to try to stop this merger -- a merger that provides consumers more choices, lower prices and the first of its kind a la carte channel selection."

NAB disclosed last year that it was providing financial support to C3SR, says NAB spokesman Dennis Wharton., adding that the group also supports Brownback's efforts to get the redacted documents." 

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