Wednesday, July 11, 2007

Another Satellite Radio Provider?

As a few of you may recall, Primosphere was one of the four original bidders for a satellite radio license. It is still one of four permitted to hold a satellite radio license. Ultimately, the Commission narrowed the number of licenses available. Primosphere's application to launch and operate satellites for satellite radio service was dismissed. In December 2001, Primosphere requested a Application for Review of the dismissal. Finally, in April 2004, Primosphere submitted a motion to withdraw the Application for Review. Well, it seems that the FCC never got around to acting on this motion; therefore, the motion remains active, according to Primosphere.

Primosphere has now withdrawn it motion to withdraw the Application to Review. As a direct result of the proposed merger of XM and Sirius, Primosphere, on July 03, 2007, submitted a Motion to Consolidate the application of XM and Sirius with its application to launch and operate satellites for satellite radio service.

That's interesting enough, but consider that there are only two bands approved for satellite radio. On March 19, 2007, Primosphere submitted a Supplement to its Application for Review, where it asked for a portion of the bandwidth granted to XM and Sirius (and use of the combined company's satellites) in the event the merger is approved. This way, they could begin service almost immediately, providing competition to the merged entity.

On April 23, 2007, Sirius submitted a Motion to Strike, saying that Primosphere's motion to withdraw was effective immediately. On May 08, Primosphere countered with its Opposition to the Motion to Strike, countering the arguments made by Sirius.

On May 18, both XM and Sirius filed a reply to the Opposition to the Motion to Strike, again saying that Primosphere's original withdrawal was final. They also asked the Commission to strike the Supplement to the Application for Review as fatally defective.

We can't say who is correct, but Primosphere seems to be trying to exploit a legal technicality. On the other hand, XM's and Sirius' claim that once a withdrawal has been made, it is over may not be correct either. For example, XM withdrew its application to operate very low powered repeaters once the application became moot (SAT-STA-20070508-00067 STA). The Commission later issued a public notice acknowledging the withdrawal, offically accepting it.

This may be all XM and Sirius need to see their wish granted. Be careful what you ask for.

Update July 13, 2007: It seems that Primosphere has filed multiple Applications for Review. The International Bureau records only go back to the latest one. The FCC formally denied Primosphere's first Application for review. The Commission was very explicit on that one:

On November 30, 2001, the Commission denied both of Primosphere’s applications for review and reaffirmed the October, 1997 Bureau Orders granting CD Radio and AMRC’s applications for the two available SDARS licenses. Therefore, Primosphere’s application is moot.

Primosphere filed another Application for Review when Motient transferred the satellite radio licenses in 2000. Below is a history from a SEC filing:

CHALLENGE TO XM SATELLITE RADIO'S LICENSE.                             

In June 1997, Primosphere, one of the two losing bidders in the
Digital Audio Radio Service (DARS) auction, filed a Petition to Deny the
application of XM Satellite Radio Holdings Inc. and subsidiaries (the
"Company") for an FCC license. Primosphere alleges that an entity,
WorldSpace, had effectively taken control of the Company without FCC approval
and that WorldSpace has circumvented the FCC's application cut-off
procedures. (WorldSpace is no longer a stockholder in the Company.)

The FCC issued a decision denying Primosphere's petition. Primosphere
filed an Application for Review of this decision, but the FCC has not acted on
the Application for Review, which has been pending since November 1997. The
FCC's order granting the Company its license remains in effect during the
pendency of this Application for Review. In March 2001, Primosphere asked a
federal court of appeals to mandate that the FCC act on its Application for

In December 2000, the FCC approved a transfer of control of the
Company's FCC license from Motient Corporation to a diffuse group of owners,
none of whom has a controlling interest in the Company. Primosphere objected to
the transfer, and the FCC has conditioned its approval on the ultimate outcome
of Primosphere's Application for Review, but declined to act on the Application.

The Company believes that the award of its license will continue to be
upheld. The Company of course cannot guarantee the ultimate outcome of this
challenge. If this challenge is successful, the FCC could in its discretion take
a range of actions, which could harm the ability of the Company to continue its
satellite radio service.

The above predates the earliest Application for Review on record with the International Bureau. The text of this application has not be located. Apparently, the latest Application of Review was yet another one. Enough's enough.

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Gary said...

I think they're trying to take advantage of a legal technicality, too. Not illegal, but it sure seems wrong.

Bert said...

XM made the point that Primosphere lost its case in the court of appeals and did the right thing and withdrew its application to review--end of story.

However, I don't see why Primosphere can't simply submit another application and ask for it to be consolidated with the proposed merger. The Commission might look favorably on it. Of course, it would interfere with XM's and Sirius' plan. On the other hand, it might be a good use of XM's bandwidth made available by hierarchical modulation.

Randy said...

Won't this, in fact, make XM and Sirius a monopoly...the very thing that they're trying to prove to the FCC that they're not? It's anti-competitive, so screw those guys. If they want to merge, then Primosphere gets that license. If they're unwilling to do that, then they don't merge. Period.

Bert said...

I think it would be difficult for XM and Sirius to make the case for the merger to a monopoly and at the same time deny the entry of a competitor. It kind of puts them between the proverbial rock and a hard place. it interferes with how the two would like to merge. Both would like to keep their respective bandwidth for the foreseeable future and broadcast more or less the same content. If they give up the bandwidth gained by employing hierarchical modulation contents, then it is moot; they can merge under the same conditions and allow another competitor to enter. If they are serious about the reasons given for the merger, there is no logical reason to deny Primosphere as an entrant.

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