Monday, April 30, 2007

Petition for Declaratory Ruling on Interoperable Radios

A Petition for Declaratory Ruling concerning Interoperable Radios has been made to the FCC in the merger proceeding. We think this petitioner hits the nail on the head. XM and Sirius have been disingenuous in their attempt to provide interoperable radios. They say the technology has been developed but there is no incentive for anyone to market it. We don't think this is what the FCC meant. We believe that the FCC meant that all radios would be interoperable. It is silly to think that a consumer is going to replace an OEM radio with an interoperable radio. The intent of interoperability was so the consumer could switch services with no additional hardware purchases. The ONLY way this can happen is if all radios are interoperable.

He makes an excellent point that for those that purchased XM so that they could listen to NASCAR now have to purchase Sirius radios in order to listen to NASCAR. If they had lived up to the interoperable requirement, the consumer would not have to purchase a new radio; they could simply switch services. It is only a matter of time before there are lawsuits over this. It is another vulnerability to which they have exposed their shareholders.

We agree 100% with the petitioner; a Declaratory Ruling is in order.

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Anonymous said...

I read the petition and it does not say that they must provide the interoperable radio to the consumer at retail or via OEM. It merely states they need to develop a radio which was done (according to Sirius). It was the FCC or Justice who originally divided up the car market and the Consumer electronics market to be either with Sirius or XM. Originally GM was with XM and Ford and Chrysler were with Sirius... this was mandated. The same is true for CE. XM and Sirius were not allowed to bring hardware to market directly. They were REQUIRED to use a set list of CE manufacturers. They were allowed to design and develop but not market and distribute. Why do you think Delphi makes XM radios? They were on the list. When Sony and Pioneer wouldn't distribute the Skyfi, it fell to Delphi.

Obviously, there are more manufactures in the world than were not on the lists like: Honda, Toyota, Subaru, Hyundai, Directed Electronics, Samsung, etc. These companies had the option to choose sides or opt out of the market.

The reality is that you can't force 3rd parties to manufacture and distribute products that they do not think they can sell. With XM and Sirius not subsidizing the interoperable products as they do single service products, due to the lack of a guaranteed subscription, device manufacturers cannot sell them at a price consumers would be willing to pay and no company as of yet is willing to risk millions to find out.

If the FCC really wanted interoperability they should have mandated a single standard for the transmission of the satellite broadcast by allowing the two companies to develop independent standards they created this problem. The FCC thought that the competition in content, delivery and hardware was better than a restrictive single standard. Ultimately they were correct. Things like Nav traffic, backseat video, weather data for aviation stock quotes and sports scores are all thing that a restrictive standard would not allow for.

Even without the merger interoperable radios will happen, but they will only happen when the hardware cost are cheap enough that a manufacturer can sell a radio at retail or an OEM can install a radio in a vehicle at a cost that is NOT prohibitive. Granted, some car manufacturers have signed contract for exclusivity in return for “something” that makes the installation of a single provider worth it but contracts expire… as they always do.

Anonymous said...

The interoperability requirement is addressed at pages 15-16 of the XM/Sirius FCC transfer application.

Anonymous said...

Dear Mr. Donnelly:

As an alternative to the Commission mandating standards for receivers used in providing Satellite Digital Audio Radio Service (SDARS), SDARS operators are to certify to the Commission that their systems include a receiver that will permit end users to access all licensed SDARS systems that are operational or under construction.1 The Commission authorized Sirius Satellite Radio Inc. (Sirius) in 1997 to provide SDARS in the United States subject to such a certification.2 The authorization of the other SDARS licensee, XM Radio Inc. (XM Radio), is subject to an identical certification requirement.3

In our recent authorization of XM Radio for the launch and operation of
replacement satellites,4 we noted that Sirius and XM Radio have on file a letter dated October 6, 2000, in which the two SDARS licensees announced an agreement to develop a unified standard for satellite radios, and stated their anticipation that interoperable chips capable of receiving both services would be produced in volume in mid-2004.5 The two licensees also stated their agreement to introduce interim interoperable radios, prior to the introduction of fully-interoperable chipsets, that would include a common wiring harness,

Anonymous said...

The relevant rule (Section 25.144(a)(3)(ii)) requires that each licensee "Certify that its satellite DARS system includes a receiver that will permit end users to access all licensed." Sirius and XM have designed such a receiver and offered it for license to radio manufacturers. But neither XM nor Sirius makes radios, nor did the Commission require them to.

Bert said...

The record is clear. XM and Sirius committed to producing chipsets in volume as a poster pointed out in a previous post. There are no takers because the chipsets have never been produced in volume, so there is no incentive. XM and Sirius have constructed their contracts with the OEM's such they have every incentive not to implement interoperable radios. The lack of a market is their own making.

Furthermore, in Sirius' 2003 Annual Report, it clearly indicated a different impression of its obligations for an interoperable radio:

"Under our joint development agreement with XM Radio, any new agreements with automakers will be on a non-exclusive basis and will require that such automakers install radios capable of receiving both SIRIUS and XM Radio's satellite radio service as soon as such interoperable radios become available."

Well, according to XM and Sirius, it is available, so shouldn't we see the OEM's implementing interoperable receivers?

Sirius, at least at that time, saw the OEM's moving towards interoperable radios. Both services have twisted the words of the FCC until now it means that as long as they make an effort, that is enough to satisfy the condition that the FCC placed on them.

The FCC hinted at its dissatisfaction when XM applied to launch its new satellites and again when Sirius applied to launch its geostationary satellite. It appears that the FCC is not completely satisfied with the progress.

I think that the FCC's intent was clear; however, honest people can disagree. Therefore, a ruling by the FCC is in order to clarify the situation.

Anonymous said...