Friday, February 23, 2007

XM's Notice of Inquiry for Its Repeaters

Most of you by now have heard about XM's disclosure that it received a notice of inquiry (NOI) from the FCC. It should not be a surprise to our readers here. Ultimately it could result into a notice of apparent liability (NAL), which will result in a "forfeiture" of some magnitude.

The FCC has been handing out NAL's right and left the last few weeks. They have handed out NAL's every day this month, except one. A quick count shows 156 NAL's or other forfeitures this month alone, resulting in a weighted average of $4,700 for each incident. Most of these were for failure to file for renewal in a timely matter. The vast majority of the forfeitures were for $1,500 (73). The next most popular forfeiture was for $7,000 (47). Forfeitures were for as much as $25,000 (1) for the month. There were only 17 forfeitures above $7,000.

Since both XM and Sirius volunteered the information, one would expect the forfeitures to be minimum. We would guess a worse case of $1,500 per incident. The total amount would depend on whether the FCC considers the network of repeaters as a whole or individually. And then there are the 4 repeaters that XM continued to operate with authority. Quite possibly, the FCC could look unfavorably on this and hit them with the maximum penalties.

If satellite radio can get this out of the way without curtailing the repeater network, it would be well worth a million dollars to get it out of the way. We expect it to be much less than that.

As a further note, in a December 2006 filing regarding its repeaters in response to a WCS Coalition filing, XM establishes that the precedent of the FCC treating unauthorized conduct separately from an STA request. Providing that the FCC does in fact accept this notion, then the NOI should have no impact on whether the repeaters are ultimately shut down or the power reduced. There should only be concern over how much they might be fined. If you have not read the above referenced filing, it is worthwhile to do so. It is one of XM's better responses. We learned a few things.

As XM stated, they have filed for special temporary authority (STA) to operate its modified repeater network. This filing should be considered independently of any forfeitures that might be imposed. It is the STA that will determine if any repeaters are shut down or it the power is reduced. The WCS Coalition has already lost the battle (short term) over whether the power is determined by average or peak. If the December filing, XM makes it clear that power has always been determined by the average. For the WCS license holders, it is peak power. That is a mistake that we made ourselves in differentiating between the two services.

If you would like to learn more about this process, please follow this link.

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