Friday, March 30, 2007

XM Withdraws 30 Application to Relocate Repeater To Harrah's Casino and Hotel

Today, XM withdrew its application to relocate its repeater formally located at the StarDust Hotel in Las Vegas to Harrah's Casino and Hotel. No explanation was given, but 30 days has long past and it is now a moot point. In the last letter to the FCC about the application, XM blasted the WCS Coalition for continuing to play games with the average versus peak power. The Coalition recently acquiesced and said they would no longer oppose the repeaters on these grounds and would wait for the FCC to decide the matter in a rulemaking.

Update: April 01, 2007

At the same time that XM withdrew the above application, it filed for a 180 day authority to operate a repeater at Harrah's to cover the Strip. The original 30 day application was granted and was used to cover the Consumer Electronics Show (CES). It is no longer needed for that purpose and was therefore withdrawn. The present application is on a more permanent basis. It is marginally lower in power that the repeater in the 30 day grant.

It all makes sense now.

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Official Public Notice for the Transfer of Control

Here is the official Public Notice for the transfer of control. See previous post about viewing and filing comments.

PUBLIC NOTICE

Federal Communications Commission
445 12th St., S.W.
Washington, D.C. 20554

News Media Information 202 / 418-0500
Internet: http://www.fcc.gov
TTY: 1-888-835-5322

DA 07-1435

Released: March 29, 2007

XM SATELLITE RADIO HOLDINGS, INC. AND SIRIUS SATELLITE RADIO, INC. SEEK APPROVAL TO TRANSFER CONTROL OF LICENSEE ENTITIES HOLDING FCC LICENSES AND OTHER AUTHORIZATIONS

MB Docket No. 07-57

On March 20, 2007, pursuant to Section 310(d) of the Communications Act of 1934, as amended, XM Satellite Radio Holdings Inc. (“XM”) and Sirius Satellite Radio Inc.(“Sirius”) submitted consolidated applications to the Commission seeking consent to transfer control of certain of their respective subsidiaries that are the holders of various Commission licenses and other authorizations.

This proceeding will be treated as “permit but disclose” for purposes of the Commission’s ex parte rules. See generally 47 C.F.R. §§ 1.1200-1.1216. Should circumstances warrant, this proceeding and/or any related proceeding may be designated as restricted. As a result of the permit-but-disclose status of this proceeding, ex parte presentations will be governed by the procedures set forth in Section 1.1206 of the Commission’s rules applicable to non-restricted proceedings. Parties making oral ex parte presentations are directed to the Commission’s statement re-emphasizing the public’s responsibility in permit-but-disclose proceedings and are reminded that memoranda summarizing the presentation must contain the presentation’s substance, and not merely list the subjects discussed. More than a one- or two-sentence description of the views and arguments presented is generally required. We urge parties to use ECFS to file ex parte submissions.

For further information, contact William D. Freedman, (202) 418-1415, Royce Sherlock, (202) 418- 2330, or Marcia Glauberman, (202) 418-7046, of the Media Bureau. Press inquiries should be directed to Clyde Ensslin (202) 418-0506. TTY: (202) 418-7172 or (888) 835-5322.



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DirecTV Hit with Notice of Apparent Liability

A friend and fellow FCC watcher sent in the Notice of Apparent Liability assessed against DirecTV, suggesting that this could be used as an example of how XM's and Sirius' non-compliant repeaters might be treated, especially those operating without operating without a license.

DirecTV was hit with a Notice of Apparent Liability (NAL) in the amount of $10,400 for operating its earth station without Commission authority and for failing to file a timely renewal application.

The maximum penalty is $10,000 for operating without a license and $3,000 for failing to file in a timely matter. The FCC first proposed cutting each in half for a total of $6,500 then considered DirecTv's ability to pay and raised it to $13,000 ("From those according to their ability..."). Because no interfered occurred and DirecTv made voluntary disclosures to the FCC, the FCC reduced the fine to $10,400.

Both XM and Sirius made voluntary disclosures to the FCC and no interference occurred, so these should be considered mitigating circumstances. Plus, their ability to pay could be considered a mitigating circumstance.

Here is the NAL:

Before the
Federal Communications Commission
Washington, D.C. 20554

In the Matter of
DirecTV Enterprises, LLC
Satellite Earth Station, Call Sign E950349
El Segundo, CA


File No. EB-06-SE-202
NAL/Acct. No. 200732100019
FRN: 0003779329

NOTICE OF APPARENT LIABILITY FOR FORFEITURE

Adopted: March 27, 2007 Released: March 29, 2007

By the Chief, Spectrum Enforcement Division, Enforcement Bureau:

I. INTRODUCTION

1. In this Notice of Apparent Liability for Forfeiture, we find DirecTV Enterprises, LLC
(“DirecTV”), licensee of satellite earth station, call sign E950349, El Segundo, California, apparently liable for forfeiture in the amount of ten thousand, four hundred dollars ($10,400) for operating its earth station without Commission authority and for failing to file a timely renewal application. DirecTV acted in apparent willful and repeated violation of Section 301 of the Communications Act of 1934, as amended, (“Act”)1 and Sections 25.102(a) and 25.121(e) of the Commission's Rules (“Rules”).

II. BACKGROUND

2. DirecTV’s license for its Ku-band fixed satellite service earth station, call sign E950349,
expired on October 27, 2005. On April 27, 2006, counsel for DirecTV indicated to International Bureau staff that the license for the earth station was not renewed prior to its expiration date. On May 1, 2006, DirecTV filed a request for special temporary authority (“STA”) to operate the earth station pending grant of an application for a new earth station license. The International Bureau granted DirecTV’s STA request on May 2, 2006, but rescinded the grant on May 3, 2006, and dismissed the STA request as defective on May 5, 2006.3 On the same day, May 5, 2006, DirecTV filed another STA request, which the International Bureau granted on May 18, 2006

3. Because it appeared that DirecTV may have operated the earth station without authority
after expiration of its license, the International Bureau referred this case to the Enforcement Bureau for investigation and possible enforcement action. On November 9, 2006, the Enforcement Bureau's Spectrum Enforcement Division (“Division”) issued a letter of inquiry (“LOI”) to DirecTV.

4. In its December 22, 2006 response to the LOI,6 DirecTV states that it first became aware
“on or about April 27, 2006” that its license for earth station E950349 had expired. DirecTV
acknowledges that it operated earth station E950349 without authority from October 27, 2005 to May 2, 2006 when the International Bureau granted an STA. DirecTV asserted that once it realized that its license for earth station E950349 had expired, it initiated steps to apply for an STA to continue operating its earth station pending Commission action on a new license application. The International Bureau granted its application for a new license on August 25, 2006.

III. DISCUSSION

5. Section 301 of the Act and Section 25.102(a) of the Rules prohibit the use or operation of any apparatus for the transmission of energy or communications or signals by an earth station except under, and in accordance with a Commission granted authorization. Additionally, Section 25.121(e) of the Rules requires that licensees file renewal applications for earth stations “no earlier than 90 days, and no later than 30 days, before the expiration of the license.”

6. As a Commission licensee, DirecTV was required to timely renew its authorization in order to operate its earth station. DirecTV concedes that it has operated earth station E950349 without Commission authorization from October 27, 2005, to May 2, 2006. By operating its earth station for approximately six months without authorization, DirecTV apparently violated Section 301 of the Act and Section 25.102(a) of the Rules. DirecTV also apparently violated Section 25.121(e) of the Rules by allowing its license to lapse without renewal.

7. Section 503(b) of the Act,9 and Section 1.80(a) of the Rules,10 provide that any person
who willfully or repeatedly fails to comply with the provisions of the Act or the Rules shall be liable for a forfeiture penalty. For purposes of Section 503(b) of the Act, the term “willful” means that the violator knew that it was taking the action in question, irrespective of any intent to violate the Commission's rules, and “repeatedly” means more than once.11 Based upon the record before us, it appears that DirecTV’s violations of Section 301 of the Act and Sections 25.102(a) and 25.121(e) of the Rules were willful and repeated.

8. In determining the appropriate forfeiture amount, Section 503(b)(2)(E) of the Act directs
us to consider factors, such as “the nature, circumstances, extent and gravity of the violation, and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require.” Having considered the statutory factors, as explained below, we propose a forfeiture of $10,400.

9. Section 1.80(b) of the Rules sets a base forfeiture amount of ten thousand dollars ($10,000) for operation of a station without Commission authority and three thousand dollars ($3,000) for
failure to file required forms or information.13 As the Commission recently held, a licensee’s failure to timely file a renewal application and its continued operations without authorization constitute separate violations of the Act and the Rules and warrant the assessment of separate forfeitures.

10. We propose a forfeiture in the amount of $5,000 for DirecTV’s unauthorized operation of
its earth station E950349 after October 27, 2005. In proposing this forfeiture amount, we recognize that the Commission considers a licensee who operates a station with an expired authorization in better stead than a pirate broadcaster who lacks prior authority, and thus downwardly adjust the $10,000 base forfeiture amount accordingly.15 Consistent with precedent,16 we also propose a forfeiture in the amount of $1,500 for DirecTV’s failure to file a renewal application for its earth station within the time period specified in Section 25.121(e) of the Rules. Thus, we propose an aggregate forfeiture amount of $6,500 ($5,000 for unauthorized operation and $1,500 for failure to file a timely renewal application).

11. The $6,500 base forfeiture amount is subject to adjustment, however. In this regard, we
consider DirecTV’s size and ability to pay a forfeiture. To ensure that forfeiture liability is a deterrent, and not simply a cost of doing business, the Commission has determined that large or highly profitable companies, such as DirecTV, could expect the assessment of higher forfeitures for violations. Given DirecTV’s size and ability to pay a forfeiture, we conclude that an upward adjustment of the base amount to $13,000 is appropriate.

12. DirecTV claims that renewal of its earth station was the responsibility of its Latin America operations and was “managed by a separate arm of the company.” Thus, DirecTV explains,
timely renewal of earth station E950349 “slipped through the cracks.” As a Commission licensee, DirecTV is charged with the responsibility of knowing and complying with the terms of its authorizations, the Act and the Rules, including the requirement to timely renew the authorization for its earth station.19 DirecTV also states that no interference occurred during its operation of its earth station. It is well established that the absence of public harm is not considered a mitigating factor for a rule violation. We do find, however, that a downward adjustment of the proposed forfeiture from $13,000 to $10,400 is warranted because DirecTV made voluntary disclosures to Commission staff and undertook corrective measures after learning of its violations, but prior to any Commission inquiry or initiation of enforcement action.

IV. ORDERING CLAUSES

13. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the Act22 and Sections 0.111, 0.311 and 1.80 of the Rules,23 DirecTV IS hereby NOTIFIED of its APPARENT LIABILITY FOR FORFEITURE in the amount of ten thousand, four hundred dollars ($10,400) for the willful and repeated violation of Section 301 of the Act and Sections 25.102(a) and 25.121(e) of the Rules.

14. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,24 within thirty
days of the release date of this Notice of Apparent Liability for Forfeiture, DirecTV SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture.

15. Payment of the forfeiture must be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment must include the NAL/Acct. No. and FRN No. referenced above. Payment by check or money order may be mailed to Federal Communications Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340. Payment by overnight mail may be sent to Mellon Bank/LB 358340, 500 Ross Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire transfer may be made to ABA Number 043000261, receiving bank Mellon Bank, and account number 911-6106. Request for full payment of the NAL amount under an installment plan should be sent to: Associate Managing Director – Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington, D.C. 20554.25
16. The response, if any, must be mailed to the Office of the Secretary, Federal
Communications Commission, 445 12th Street, S.W., Washington, D.C. 20554, ATTN:
Enforcement Bureau – Spectrum Enforcement Division, and must include the NAL/Acct. No. referenced in the caption.

17. The Commission will not consider reducing or canceling a forfeiture in response to a
claim of inability to pay unless the petitioner submits: (1) federal tax returns for the most recent three year period; (2) financial statements prepared according to generally accepted accounting practices; or (3) some other reliable and objective documentation that accurately reflects the petitioner’s current financial status. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation submitted.

18. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability for
Forfeiture shall be sent by first class mail and certified mail return receipt requested to William M. Wiltshire, Esq., Counsel for DirecTV Enterprises, Harris, Wiltshire & Gannis, LLP, 1200 Eighteenth Street, NW, Washington, DC 20036 and Mr. Jack Wengrynuik, DirecTV Enterprises, LLC, 2230 E. Imperial Hwy, El Segundo, CA 90245.

FEDERAL COMMUNICATIONS COMMISSION

Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau

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XM Wins One in Arbitration (Update)

Last November, we reported the following:

On September 14, 2006, XM sought relief from National Arbitration Forum to prevent Kyle Kennedy from using domain names that could be confused with XM. In fact, he tried to sell the domain name "xmstations.com" to XM for $175,000 to $200,000, plus a one to two year subscription to satellite radio. The lengths people go to listen to satellite radio ...lol. He threw in other domain names as "perks". The decision, issued on November 07, 2006, was a clear victory for XM.

Today, Mr. Kennedy filed a comment to this post protesting his innocence. In all fairness, we are highlighting those comments here so that they may be heard, since the original post is buried deep in the archives. We thank Mr. Kennedy for taking the time to comment:

In no way did I ever do any of the things they said I had done. Dont be ignorant and believe everything you read on the internet. The problem at hand was I aquired a great domain, and the legal system had to fib to take it away from me and declare that "justice". That is exactly what happened. Again, the things in the forum that were posted that I said never took place. I advise you to read up on the NAF (National Arbitration Forum) and how corrupt they actually are.

Posted by KYLE KENNEDY

11:24 PM


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Thursday, March 29, 2007

Merger Docket 07-57

It appears that docket # 07-57 is where the Sirius/XM merger will be made public. All the various applications by XM and Sirius are there, but no further comments.

To access the site, follow this link. Enter the number 07-57 in the "Proceeding" field. All the public comments will eventually be filed here. Check often.

If one wants to file a comment, go here.

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Sirius Indoor Signal Repeater

Remember Dr. Argy Petros, XM's RF front end specialist in the early days? He left XM to form his own company called Think Wireless (TW). Anyway, today his company received a grant for a Sirius indoor signal repeater. Some of the documents indicates that it is more or less identical to the XM signal repeater. Evidently, his company has the rights to the units, either that or XM has licensed the technology to Sirius.

System Overview

Sirius compatible indoor signal repeater

2.3 GHz (Sirius band) to 900 MHz (ISM band) frequency translation

TX unit receives Sirius signal via Sirius antenna at 2.3 GHz, down converts it to 900 MHz and rebroadcasts the signal

RX unit receives re-broadcasted signal from TX unit at 900 MHz, up converts it to 2.3 GHz and feeds Sirius radio

Ideal for indoor use in the home or office

Each Sirius radio connected to a RX unit can be placed up to 75 ft away from the TX unit

Signal penetrates typical walls, doors, floors etc. found in structures in North America

Supports multiple Sirius radios with single TX unit as long as Sirius radio is connected to a RX unit and is within range of TX unit

Works with both indoor and outdoor antennas

Update: The only other grant to Think Wireless is for the receiving end issued a few day earlier.

There is other literature that leads one to believe that this will be marketed by Directed.

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ABA and HAB Join NAB in Petition to Deny Sirius Authority to Operate Repeaters in Hawaii and Alaska

On March 19, the Alaska Broadcasters Association and the Hawaii Association of Broadcasters joined the NAB in a Petition to Deny Sirius the authority to operate repeaters in Alaska and Hawaii.

Sirius has stated that they have subscribers in Alaska and Hawaii; however, we doubt any subscriber in Hawaii actually receives a signal.

There are reports of subscribers in Alaska that receive satellite radio. Whether there are subscribers in Anchorage, Juneau, or Fairbanks is unknown to us. The Alaska Broadcasters Association should explain to the good people of Alaska why they should be second class citizens. We invite them to let the FCC know how they feel about it. The people of Alaska deserve the same choices as the rest of the union. As far as Hawaii goes, we are not convinced that anyone receives satellite radio there with a conventional satellite radio receiver.

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XM Re-Issues Repeater Exhibit

On March 22, 2007, XM re-issued the exhibit of repeaters, now showing only the repeaters that do not conform. The change was made to clarify the situation. Previously, complying and non-comply repeaters were listed together.

During the process, XM discovered that 10 repeaters previously thought to be out of compliance were actually in compliance. XM also discovered that 4 repeaters thought to be in compliance were actually not in compliance. In addition, 27 sites for which repeaters were not compliant, the non-compliance was mis-identified (should have been up tilt rather than down tilt, etc.). The revised exhibit corrects these errors.

XM also requests that it be allowed to re-locate six repeaters due to lease expiration or other site problems.

Hopefully, this doesn't reset the clock.



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Tuesday, March 27, 2007

Sirius Requests Authority to Operate Repeater at BMW National Aftersales Conference.

"Sirius Satellite Radio requests Special Temporary Authority to operate a terrestrial repeater at the BMW National Aftersales Conference in Las Vegas, NV from April 27, 2007 to May 1, 2007."

Update: April 25, 2007

Sirius was granted authority today to operate the repeater.

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Filing Comments with the FCC International Bureau

Want to file your own comments to the FCC International Bureau? Here's how. The International Bureau is different from the rest of the FCC in this regard. It is not yet automated, although the FCC is presently working on this. So, basically, one has to send or fax a letter. (It is possible to email the comments, but this is something that was volunteered and it a privilege we would not want to see abused. We could package comments to the FCC in this matter.)

The process is simple. One mails the comments to the secretary of the FCC, noting the application. The header example below was taken from an application by the WCS Coalition. It is an excellent example:

Ms. Marlene H. Dortch
Secretary
Federal Communications Commission
445 Twelfth Street, SW
Washington, DC 20554

Re: Request Of XM Radio Inc. For Special Temporary Authorization Regarding Digital Audio Radio Service Terrestrial Repeater – File No. SAT-STA-20070205-00026

==================================

Also, you will need to include your name and address. Warning: All information will become public.

The only difficulty is know the correct application or file number (such as File No. SAT-STA-20070205-00026). If you need to know the application number, send us an email.

XM'ers, don't be out done by Sirius! Let your views be know too.

Update: Here are some of the relevant proceedings:

SAT-STA-20060623-00067 Sirius-Request for 16 addition repeaters

SAT-STA-20061013-00121 Sirius-Authority to operate 11 repeaters that were shut down

SAT-STA-20061013-00122 Sirius-Same as above, but only for 30 days.

SAT-STA-20061107-00131Sirius-Repeaters for Hawaii and Alaska

SAT-STA-20061107-00132 Sirius-Relocation of Las Vegas repeater

SAT-STA-20061207-00145 Sirius-Authority to operate 15 new low powered repeaters

SAT-STA-20061208-00146 Sirius-Relocation of Las Vegas repeater (30 day)

SAT-STA-20070424-00063 Sirius-Repeater for stock holders meeting

SES-T/C-20070320-00379 Sirius-Transfer of control

SAT-STA-20061002-00114 XM-Authority to operate current repeater network (30 day)

SAT-STA-20061013-00119 XM-Same as above, except 180 day

SAT-STA-20061013-00120 XM-Request to operate 14 new repeaters

SAT-STA-20070222-00036 XM-Request to operate signal boosters and very low powered repeaters

SAT-STA-20070223-00039 XM-Extension of time to drift XM-1due to solar activity

SAT-STA-20070330-00059 XM-Las Vegas substitute repeater

SAT-T/C-20070320-00054 XM-Transfer of control

SES-T/C-20070320-00380 XM-Transfer of control

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All I Want for Christmas is My Sirius Satellite Back!

Representative Tim Holden made an inquiry at the request of a constituent to the FCC about the 11 repeaters that Sirius voluntarily shut down due to non compliance issues. I salute the constituent getting involved and Representative Tim Holden for his follow up. If only all subscribers and representatives were this conscientious...

First, the constituent letter. It only recently became available, although it goes back to the end of last year. Tim, in this case, is the District Director. Names and numbers have been changed:

Hi Tim,

Thank you for such prompt follow up.

Sirius Satellite Radio utilizes terrestrial ground repeaters to send their signal into buildings, under bridges and so forth.

They are apparently, or were, out of FCC compliance with several of these units in Pennsylvania and Delaware as I understand the situation and had to shut them down on Friday Octobcr 13th. When you drive into a parking garage, under a bridge, through a tunnel, or down a tree lined street. You lose the reception and a message that says “acquiring signal” displays on your receiver.

I spent the past few weeks emailing and calling back and forth with their customer service, investor relations and other departments to ascertain the facts. The last conversation I had on December 5th with Ms. Azure Rae(arae@siriusradio.coln) was the clearest explanation I received. According to Ms. Rae, the FCC paperwork to bring SIRIUS into the correct compliance has been submitted to the FCC and is now in their hands awaiting action.

In the meantime, anyone with Sirius Satellite service in the Harrisburg/ Central PA region is unable to fully utilize our paid subscription based service. SIRIUS has provided me with a three month credit to my account, but this does not give me what I am paying for. I do not want to switch to XM satellite. I would have to purchasc all new equipment and they do not offer the same programming.

I can furnish a two month long running string of emails if you desire for background or feel free to contact me for more detail at this email address or my cell # 999 999-9999.

All I want for Christmas is my Sirius Satellite back! Tim, Could you please ask someone on Congressman Holden’s staff to inquire of the FCC to get them moving on this matter in a reasonable timeframe? In the grand scheme of things this must appear a small matter, but it plays a role in my daily business activity as well as my personal listening pleasure.

Thanks and Happy Holidays,
John B. Doe
9999 Anywhere Avenue
Harrisburg, PA 17 999 -9999

========================================

Next is Representative Holden's Letter to the FCC:

CONGRESS OF THE UNITED STATES
HOUSE OF REPRESENTATIVES

Ms. Diane Atkinson
Congressional Liaison Specialist
Federal Communications Commission
445 Twelfth Street, SW, Room 8-C445
Washington, DC 20554

December 27, 2006

Dear Ms. Atkinson:

My constituent, Mr. John B. Doe, has requested my assistance regarding
his Sirius Satellite service. Enclosed please find a copy of an email that explains the situation in more detail.

Any consideration you can give to the review of this matter and a reply to my office would be greatly appreciated.

Thank you for your kind assistance in this matter.

Sincerely,
TIM HOLDEN
Member of Congress

===============================

And, finally, here is the FCC response:

Federal Communications Commission
Washington, DC 20554

February 12,2007

The Hon. Tim Holden
2417 Raybm House Office Building
Washington, DC 20515

Dear Representative Holden:

This letter is in response to you letter on behalf of your constituent, John B. Doe, requesting information about the status of certain applications filed by Sirius Satellite Rad0 Inc. (Sirius).

As noted by Mr. Doe, Sirius filed two applications on October 13,2006, in which Sirius notified the Commission that eleven ground-based stations (‘repeaters”) had been operating at locations and with technical parameters different from those authorized by the Commission. Two of these repeaters are located in Pennsylvania: one in Harrisburg, the other in Philadelphia. Sirius informed the Commission that these eleven repeaters, including the two in Pennsylvania, are no longer operating. In the Same applications, Sirius requested authority from the Commission to resume operation of these eleven repeaters. Other entities have opposed Sirius’ applications and have expressed concern that the operation of the repeaters could pose a risk of interference to
wireless licensees in neighboring spectrum bands.

Commission staff is actively reviewing the two applications and the related filings. Please be assured that the Commission plans to take action as expeditiously as possible on these applications, taking into account the complex technical and legal issues raised by them.

A copy of this letter and related correspondence will be included in the public file
of the two applications (file numbers SAT-STA-20061013-00121 and SAT-STA-
2006 10 13-00122).

Please let me know if I may be of any further assistance in this matter.

Sincerely,
Helen Domenici
Chief,
International Bureau

========================================
Update: March 29, 2007

Two more letters surfaced today: The first was handled by Representation Platts; the second, by Senator Arlen Specter.

The FCC's response to both was the same as above.


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Sunday, March 25, 2007

RIAA Updates Mission Statement

The RIAA has changed its mission statement, according to BBspot. According to BBspot, 'The RIAA has updated its mission statement from "Our mission is to foster a business and legal climate that supports and promotes our members' creative and financial vitality" to "Our mission is to maximize hatred for the music industry by using creative legal and innovative technological methods which will further destroy our member's creativity and financial vitality." The organization hopes the change will more accurately reflect their long-term goals.'

BBspot quotes Chairman and CEO of the RIAA Mitch Bainwol as saying, "This change allows us to focus on our goals of ridding ourselves of annoying artists and consumers completely. The Internet has made this possible. In the days before the Internet only a few artists and industry insiders hated the RIAA, now hatred for the RIAA is at an all-time high."

We found the story at Recording Industry versus the People, but you can also link to the original story here.

See other RIAA news stories at BBspot here:

RIAA Makes Big Donation to SETI Project; Hopes to Sue Aliens

RIAA Offers Lawsuit Family Packs

RIAA Wants Background Checks on CD-RW Buyers

RIAA Sues Mirror Manufacturers

RIAA Reanimating Dead Musicians To Eat Brains of File Sharers

NBC Announces Law and Order: RIAA Series

Typo Prompts RIAA to Prosecute Fire Sharers

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Wednesday, March 21, 2007

How Will the Merger be Judged?

Both the FCC and the DOJ will evaluate the merger using the guidelines below. If you read the EchoStar/DirecTv merger attempt, the FCC analysis read like a playbook from these guidelines. Follow the links and judge for yourself how this merger will be perceived:

Table of Contents - Horizontal Merger Guidelines
U.S. Department of Justice and the Federal Trade Commission



O. Purpose, Underlying Policy Assumptions,and Overview
0.1 Purpose and Underlying Policy Assumptions of the Guidelines
0.2 Overview

1. Market Definition, Measurement and Concentration
1.0 Overview
1.1 Product Market Definition
1.2 Geographic Market Definition
1.3 Identification of Firms That Participate in the Relevant Market
1.4 Calculating Market Shares
1.5 Concentration and Market Shares

2. The Potential Adverse Competitive Effects of Mergers
2.0 Overview
2.1 Lessening of Competition Through Coordinated Interaction
2.2 Lessening of Competition Through Unilateral Effects

3. Entry Analysis
3.0 Overview
3.1 Entry Alternatives
3.2 Timeliness of Entry
3.3 Likelihood of Entry
3.4 Sufficiency of Entry

4. Efficiencies (Revised: April 8, 1997)

5. Failure and Exiting Assets
5.0 Overview
5.1 Failing Firm
5.2 Failing Division



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WCS Coalition Delivers Shocker

Arch nemesis WCS Coalition delivered a shocker on Monday. They stated that they would not oppose Sirius' request to put repeaters in Hawaii and Alaska, nor would they oppose the 15 additional repeaters that Sirius requested. They will no longer oppose any repeaters below 2,000 EIRP. Previously, they opposed any repeater operating over 2,000 W EIRP peak. Despite their objections, the FCC granted the STA for XM to operate a repeater at PGA events that exceeded this limit, stating that they would resolve the issue of peak versus average in a rulemaking proceeding. The Coalition acquiesced and will no longer opposed repeaters on this basis, provided that they are operated on a non-interference basis and below 2,000 EIRP, peak or average.

This is nothing short of a break through for repeaters operating below 2,000 W EIRP.

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Tuesday, March 20, 2007

Breaking News: XM and Sirius File Application for Transfer of Control

Today, XM and Sirius both filed applications with the FCC for transfer of control. Four applications have been filed so far: two by XM, one by Satellite CD Radio, and one by Sirius. First glance indicates that everything is being transferred to Sirius, but XM is the surviving entity.

The four applications all reference the same consolidated application. In addition, there are a couple of exhibits that really don't add that much to the merger discussion.

Having read the application, we are nonplussed by it. We learned very little from it. The proposed merger goes as follows:

"The Applicants have entered into a merger agreement under which a wholly owned subsidiary of Sirius, Vernon Merger Corporation, will be merged with and into XM, with XM being the surviving entity of this subsidiary merger."

There is some good news in the a la carte subscription prices in that not only will one be able to block channels but will also receive credit for those blocked channels. That will likely appeal to Chairman Martin:

"After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels, including some of the “best of both” networks, at a modest premium to the cost of one service, and considerably less than the cost of subscribing to both services. Consumers will also be able to block adult-themed channels and receive a price credit for those channels. Subscribers could continue to use their existing radios or eventually purchase new radios capable of receiving all of the content of both services when they become available."

As shareholders, we are very disappointed on the savings front. That gave little detail, instead referencing analyst projections of saving in the order of $200-400 million initially, adding up to billions in the long term. We consider the lack of details as meaning the savings are speculative:

"Analysts predict that these and other combined synergies will save the merged company $200-400 million per year in the near term, and several billion dollars over the long term. As noted above, significant portions of these savings will be shared with customers immediately and in the long-term through lower prices and improved service offerings."

The following statement demonstrates that the savings we expected just are there. Sure, there are significant savings there, just not, as shareholders, on the order that we expected to see. If this is the best they can do, why merge:

"Third, one of the largest expense items for each company is the ongoing marketing and subscriber acquisition costs associated with gaining new customers, growing the subscriber base, and increasing brand awareness. The merged company will enjoy the efficiencies of combined advertising and marketing campaigns as well as a unified set of product offerings with lower per
unit manufacturing costs due to larger scale production that should ultimately result in lower product prices for end consumers. In addition, the merged company will be able to focus marketing dollars not simply to drive brand awareness, but also to reduce consumer confusion over what satellite radio offers and to more effectively distinguish satellite radio from other
competitive audio entertainment services."

On the competition front, they use NAB's own words against them:

'As the National Association of Broadcasters (“NAB”) explained to the Commission just two months ago, “there can be no reasonable doubt that the current media marketplace is robustly competitive, and indeed exploding at the seams with consumer choices for both delivery mechanisms and content.”'

Similarly, they use Clear Channel's words against them:

"Similarly, Clear Channel Communications, one of the largest owners of radio stations in the nation, has stated: Today’s media marketplace is accurately characterized as bearing “abundance” and “multiplicity”—not “dominance” or ”scarcity,” let alone “monopoly.” Within this vast and constantly-expanding media marketplace, terrestrial radio broadcasters are subject to fresh and ever-growing competition from a vast array of new technologies and services that deliver music, entertainment, and news."

The Slacker announcement couldn't have been better timed. Slacker is referenced several times in the application:

"For example, Slacker recently introduced an Internet and satellite radio-based service. The service will be received by consumers through a device designed and distributed by Slacker. The Slacker will come with 4-inch color display, will support MP3, WMA, WMV, and MPEG-4 files, and will come with built-in WiFi and satellite reception capabilities. See Introducing Slacker, a new kind of Satellite Radio company, ORBITCAST, Mar. 14, 2007, at
http://www.orbitcast.com/archives/introducing-slacker-a-new-kind-of-satellite-radiocompany. html (last visited Mar. 15, 2007); see also J.D. Biersdorfer, Now, A Radio Station for
(Your Name Here), NEW YORK TIMES, Mar. 15, 2007, at C8."

"Slacker, a service unveiled just last week, allows users not only to customize their music channels but also to listen to them on portable devices, including in their cars; the service
includes a free, advertising-based version as well as a subscription option."

"The Slacker service described above, which uses both Internet and satellite technology, illustrates the way in which innovation is continually yielding new audio entertainment options."

They also talk about potential competition from the WCS license holders:

"In addition, other types of spectrum are available that are capable of supporting services comparable to satellite radio. Audio entertainment services similar to satellite can be deployed
using the frequencies allocated to the Wireless Communications Service (“WCS”). This spectrum is immediately adjacent to the band in which satellite radio already operates—indeed, it originally had been identified for satellite radio but was reallocated to WCS pursuant to
congressional mandate. The Commission already has authorized satellite radio in this spectrum, having stated that WCS licensees were permitted “to provide a variety or combination of services,” specifically including satellite radio."

They also address the ruling that says one entity can't hold both licenses:

"While the Commission stated in the same order that “one licensee will not be permitted to acquire control of the other remaining satellite DARS license,” this language was not codified
in the Code of Federal Regulations and thus is not a binding FCC regulation. To the contrary, it is merely a policy statement reflecting the Commission’s view, based on the evidence available
in 1997, that two satellite radio licensees were needed to have enough competition in the audio entertainment market. That statement does not preclude today’s Commission, recognizing a
radically altered competitive environment, from finding that the proposed transaction serves the public interest."

There are a few other tidbits in the application, such as the following:

"Sirius has entered into an agreement with Space Systems/Loral, Inc. to design and construct a new geostationary satellite that will complement its existing in-orbit satellites. When launched, the resulting constellation configuration is expected to provide enhanced coverage and performance."

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Monday, March 19, 2007

XM, Sirius Sued by Keystone Autonics Over Patent Infringement

It was reported by Scott Moritz with the Street.com that both XM and Sirius are being sued by a company called Keystone Autonics over a patent granted last January to George Hindman and subsequently assigned to Keystone Autonics. The patent is a modification of another patent held by Keystone Aerospace.

The abstract for latest one is given as:

Apparatus and method for I/O management in a mobile environment wherein access to data from a wireless signal is restricted based on a persistent unique hardware identification

Abstract

The present invention provides an apparatus and method for a robust and configurable mobile computer architecture with navigation computational capabilities. The present invention further provides a bus network which allows for an efficient and durable Input/Output (I/O) management system. The I/O management system has configurable connections to allow for modular addition, expansion, or replacement of navigation, crash detection, and communication line replacement units (LRUs). Additional I/O device connections allow several modes of input into the computational system. The present invention is a single, self-contained unit and provides an accessible user interface to the computer system.


The abstract for the earlier patent is given as:

Apparatus and method for a mobile computer architecture and input/output management system

Abstract

The present invention provides a system, apparatus, and method for a robust and configurable computer architecture which combines standard Amplitude Modulation (AM)/Frequency Modulation (FM) radio and Compact Disk Read Only Memory (CDROM) features with mobile computational capabilities. The present invention further provides a unique bus network which allows for an efficient and durable Input/Output (I/O) management system. The I/O management system has configurable data bus and discrete line connections to allow for modular addition, expansion, or replacement of navigation, crash detection, and communication line replacement units (LRUs). Additional I/O device connections allow several modes of input into the computational system. The present invention is a single, self-contained enclosure which easily installs into most existing vehicles with minimum time and effort. Furthermore the present invention provides an accessible user interface for the computer system and possesses several theft protection features.

At first glance, we see little in common with satellite radio. In the former there is the aspect of a unique hardware ID to limit access to data. We don't yet see any relevance to satellite radio for the latter. We haven't read the patents in detail, but there seems to be little there to hang their hat on.


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Wind Survey

With regard to the Adjustment of Rates and Terms for Pre-Existing Subscription Services and Satellite Digital Audio Radio Services (XM and Sirius), much of SoundExchange's position relies on a 427 page survey conducted by Professor Yoram (Jerry) Wind, Lauder Professor and Professor of Marketing, The Wharton School, University of Pennsylvania. It's a good survey and, not surprisingly, Wind comes to the conclusion that music is why most people subscribe to satellite radio. My major problem with it is that he divides and conquers. He compares music against several categories, such as talk, news, sports, etc. It would have seemed to make more sense for him to concentrate on music versus non-music channels, but, nevertheless, most of the data is there to make whatever comparison one desires. From another study, it seems that the going rate for these studies is on order of $400 an hour, $200 for junior assistants. No doubt, they paid a bundle for this study. Satellite radio would do well to pay attention to the results.

Wind was hired by SoundExchange (RIAA more or less) "to conduct a survey to examine the value that subscribers and potential subscribers to satellite radio place on the various types of programming and the non-programming features of satellite radio." The survey was a double blind study of 428 "randomly" selected individuals that were either Sirius or XM subscribers or individuals considering subscribing within the next 30 days.

He concludes that 43% would drop the service or never subscribe if it lacked music, and, if music weren't available, respondents on average would only be willing to pay $6.15 a month. Music is the "top reason" cited for people subscribing to satellite radio (We would have told them that for half the price). People cite music more than any other category by a 3 to 1 margin (We feel this is an irrelavant statistic. Music versus non music would yield a very different picture.). When asked to allocate 100 points among 7 categories according to relative importance, on average, 44 points were allocated to music. Nearly 49% of the time was spent listening to music. Okay, we get the point.We are surprised the numbers were as low as they are. One mildly surprising result is that music is more important than commercial-free music, by a 2 to 1 margin. So, basically, only one third of the people care that the music is commercial free, if we understand the results correctly. Traffic and weather was not a top three mention for a reason for subscribing by any participant.

He makes one very interesting point regarding recorded content. He said that it was his understanding that the vast majority of the recorded content on the comedy and kids channels were owned by SoundExchange's members and is, therefore, subject to the same compulsory license rate.

He also notes the value of the deals for Stern and Winfrey, then notes that the survey reveals that subscribers value music "two, three, four, or even five times as much as talk and entertainment programming", and concludes that, "This suggests that the market value of music rights is substantially higher than the market value of the talk and entertainment programming rights." The flaw with that argument is that music is available for free on terrestrial radio. If Stern and Winfrey were available for free on terrestrial radio, their value would be much, much less.

There's a lot more there and we encourage you to read the survey. There are plenty of fact, figures, and charts. You can even administer a survey to yourself.

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Thursday, March 15, 2007

Raytheon Patent Application for Situation Awareness Using Satellite Radio

Yesterday, Raytheon had a patent application disclosed using satellite radio in its "System and Technique for Situational Awareness". Many of you may remember in the past that XM worked with Raytheon and the military in some experiments. We haven't heard much since then, but this patent application seems to indicate that there is still cooperation between Raytheon and XM to develop some sort of system for the military and first responders. XM is specifically mentioned on several occasions. The application was filed in February 2006.



















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Tuesday, March 13, 2007

Adjustment of Rates and Terms for Pre-Existing Subscription Services and SDARS Proceeding

Both XM and Sirius are participants in the “Adjustment of Rates and Terms for Pre-Existing Subscription Services and Satellite Digital Audio Radio Services” hearing before the Copyright Royalty Board (CRB). This is the primary rate determination tribunal. As mentioned in a previous post, XM and Sirius are proposing a rate of 0.88% of revenue. SoundExchange (RIAA more or less), is proposing an initial rate of 10%, rising to 23% in the final year (2012).

SoundExchange’s principal witness appears to be Dr. Michael Pelcovits. He was the one that proposed the royalty rates for the Webcasters. The CRB agreed with the bulk of the analysis submitted by Dr. Pelcovits. The problem was that the Webcasters presented a weak argument and it was tossed by the CRB. He uses two benchmarks for determining the appropriate royalty rate for satellite radio: 1) by comparing what Sirius paid for Howard Stern and the expected rate of return; and 2) by using satellite radio costs and revenues and on standard economic modeling techniques.

In the first case, he states that, “The market price the SDARS would pay for sound recordings should be consistent with the market prices already paid for other content.” In our opinion, he is comparing apples and oranges. What does the price of sounds recording that are available for free on terrestrial radio have to do with the market price paid for content such as Stern, NFL, or MLB? We digress. He selects Howard Stern as his benchmark. He states, “In non-technical terms, the amount Sirius paid for Howard Stern and for other content on a per-customer-acquired basis ought to equal the amount Sirius would pay for sound recordings on a per-customer-acquired basis.” The argument really becomes silly, in our opinion, when he states, “SoundExchange is not fairly compensated under the compulsory license if sound recording payments, relative to the value sound recordings provides, are lower than the comparable market-based payments to other content providers.” If sound recordings were not free on terrestrial, he might, might have a point.

The Stern analysis is interesting, none the less. He states that Sirius paid Stern $415 million (net present value) for five years (he discounts at 12% per year). He intentional neglects the incentive payments. Based on analyst opinions, Sirius expected to draw 1.6 million subscribers due to Stern. He then adds in customers that Sirius would have otherwise lost to XM, arriving at a final figure of 1.75 million subscribers. He concludes that Sirius paid $237 per subscriber to Stern for the incremental subscribers. He then uses an average life of a subscriber of 42 months and calculates that Sirius paid Stern $5.64 per month for each incremental subscriber. According to Mr. Butson, Sirius expected to generate revenue of $10.25 per subscriber in 2006, rising to $11.65 in 2010, the last year of Stern’s contract. The implications are that Sirius paid 48% to 55%of revenue for each incremental subscriber, averaging a little over 50%. Drum roll…. And “The 50% figure ought to apply equally to music content as to Stern, since a large catalog of music is essential to a music-based service and attracts customers to Sirius just as Stern attracts customers.” Next, he quotes a survey by a Dr. Wind that indicates that 56% of all Sirius subscriber revenue would be lost if it offered no music channels. From that, he concludes that SoundExchange should receive 50% of 56% of revenue for the use of sound recordings, or 28%. Assuming that music publishers receive 3.5%, he concludes that SoundExchange should receive 24.5%.

In the second case, he examines the revenue that satellite radio will likely generate in 2012. He arrives at the conclusion that satellite radio will generate a surplus of $4.67 per customer per month in 2012 in 2007 dollars. He states that economic modeling would receive 62% of that surplus, or $2.90 per subscriber per month, or 24% of revenue.

Therefore, his conclusion is that SoundExchane’s request between 10% and 23% is entirely reasonable.


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Royalties

Most everyone here has heard that Sirius and XM is in a battle with the RIAA (SoundExchange) over royalties, but did you know that XM and Sirius are engaged in three preceedings before the Copyright Royal Board Tribunal for royalty rate determination?

First, XM and Sirius are before the CRB to determine the royalties due for satellite digital audio services (SDARS), better know as satellite radio. Everyone has heard of this one. Sirius and XM are proposing a royalty rate of 0.88% of revenue. The RIAA wants a little more, starting at 10% of revenue and reaching 23% the final year. It is an interesting argument that they make. They arrive at their rate based on the rate of return Sirius expected by hiring Stern, which has little bearing on music. We will discuss that at another time.

The second proceeding is about the royalty rates for satellite radio over satellite TV. Here, Sirius is proposing a rate of $0.001235 per subscriber per month. The RIAA proposes $0.25 per subscriber per month. Sirius and XM are joined by MTV on this one.

The third proceeding is over royalty rates for business establishments. This is just getting underway and the proposed rates are not known. XM and Sirius are joined by Muzak and Music Choice on this one.

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Wednesday, March 07, 2007

Promotional Power of Satellite Radio

We were reading over some of the testimony this evening from the Copyright Royalty Board hearings from late last October. It is very interesting reading. The following is an excerpt from Eric Logan's testimony. He makes a convincing argument on the promotional power of satellite radio. This is an important argument in the determinations:

67. The promotional power of XM is evident from the number and nature of the artists and labels that want to work with us. Our Artist Confidential series has featured legendary artists like Paul McCartney, Robert Plant of Led Zeppelin and Brian Wilson of the Beach Boys, and newer stars like Coldplay, Pink and the Dixie Chicks. Our Classical Confidential series has presented interviews and performances with conductor/pianist Leonard Slatkin, young violinist Joshua Bell, singers Cecilia Bartoli and Andrea Bocelli, and flautist James Galway. The XM Then.. .Again.. .Live series has featured full album performances of classic rock artists like the Allman Brothers Band, Jethro Tull, Christopher Cross, and Cheap Ttick. Virtually all of these artists came to XM for the freedom to discuss, perform and promote their music in the way they want to be portrayed, and received no monetary compensation from XM. hi addition to these Artist Confidential shows, XM has conducted and played literally thousands of interviews with artists.

68. Artists want to be part of the XM experience. Most guest celebrity DJs program their shows for free or for a modest stipend to cover their expenses. Many of XM's artist-led shows were born at the suggestion of the artists themselves, because they appreciated XM's approach to programming music and wanted to become part of it. For example, Tom Petty proposed the idea of his Buried Treasure show to XM. Quincy Jones came to XM with his ideas for multi-part special music programs. Willie Nelson proposed to XM the idea of changing the "Hank's Place" country channel to "Willie's Place/' Hip-hop artists Snoop Dogg, Ludacris,

Trick Daddy, and Chamillionaire came to XM with the ideas for their own personal programming. Blues legend B.B. King loved the Bluesville channel so much that we awarded him the honorary post of the "Mayor of Bluesville," complete with the key to the "city." Singer/songwriter Graham Nash created his "SongStories" show because of his appreciation for XM as a platform for musicians. Country star [ ] heard Willie's Place on XM in his car, and became so moved by XM's programming approach to showcasing music that he called us up and has begun working with us on the concept for a show of his own. Other musicians who host shows on XM include folk artists Christine Lavin and John McEuen, and country legend and Hall of Famer Bill Anderson.

69. Bob Dylan was interested in working with XM on "Theme Time Radio Hour" because he was an avid XM subscriber who appreciated that XM played music he hadn't heard in decades anywhere else. On August 28, XM played Bob Dylan's newest recording, "Modern Times," in its entirety before it hit the stores. After it hit the stores, many retail outlets (including Sony's online retail website, Sony Connect) packaged the CD with a bonus CD containing an episode of his XM radio show. "Modem Times entered the charts at number one, and we have been told that XM contributed to that success.

70. Jazz trumpeter and scholar Wynton Marsalis didn't know much about XM when we first approached him to do a show on our Real Jazz channel. But once he heard XM, he was excited at the opportunity to create his "In the Swing Seat"" show and to have broadcasts of concerts from Jazz at Lincoln Center, where he serves as Music Director.

71. One of the announcers on our X Country (Cross-Country) channel is a younger musician named Jack Ingram. His work on XM has helped him build his recording career, and to attract concert audiences all across America.

72. XM also creates long-form specials of three-to-eight hours' duration chronicling the history of a recording artist. Interviews, archival material and the complete range of their music is featured in these programs. This "Complete" series has, in the past, covered artists such as The Eagles, Chicago, Les Paul, Shania Twain, Toby Keith, Bobby Darin and the Rolling Stones. Artists are excited to work with XM on these programs for the exposure it provides to our listeners.

73. We regularly receive telephone calls and correspondence from artists, managers and labels thanking us for playing their music. Many labels, artists and managers tell us that airplay on XM has increased sales of their recorded music, attesting to the value of XM. As one example, in October 2004, country star George Strait was about to release a greatest hits CD. XM created a program that interviewed him about his recordings, played all of his previous hits and premiered his new single. The program aired in 2005, just before the CD came out. George Strait's Label Head of Promotion told us that he had his single biggest one day sales ever when the new CD was released. Exhibit 22 includes emails from labels, artists and managers describing the promotional impact of XM.


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OT: NAB Requests STA for Mysterious New Technology

The NAB requested an experimental special temporary authority (STA) today to demonstrate a new DTV technology at an upcoming access-restricted industry forum. NAB requests that the details be kept secret and that the FCC expeditiously grant the application. We don't know; using their logic, perhaps this is something that should be put up for public comment. This is how they describe it:

NAB states that the instant application for special temporary authority must be granted expeditiously because the broadcast demonstration for which an STA is needed is to occur March 16 – 21, 2007 at a limited-access industry forum. NAB only recently obtained the technical details of the technology to be demonstrated (and necessary to the completion of the instant application). The broadcast of such proprietary technology is central to the demonstration. Such demonstration will show broadcasters the potential of newly-emerging technology for advanced digital services.

In another part of the application, they state, "NAB has filed an application for Special Temporary Authorization for an experimental DTV station utilizing advanced proprietary technology." So, we know that it for some new digital TV service. "

The reason they request confidentiality is that, "Details of this technology’s functionality are confidential and contain trade secrets. Information regarding the existence of this technology has not yet been made public. Public disclosure at this time could put its developer at a competitive disadvantage."

Perhaps it is the TV equivalent of HD radio. It is hot stuff: "Disclosure of the existence or details of the proprietary technology could alert competitors to this technology of its existence and status, thereby revealing information before the developer is ready to announce."

They plan to announce this new technology on April 16, 2007.

See File Number: 0150-EX-ST-2007

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Tuesday, March 06, 2007

A Way to Save a Billion Dollars or More?

We were recently asked how technically Sirius and XM might merge their services. We can only speculate.Sirius and XM indicate that each will have its own transmission for years to come. How will they achieve cost savings and continue to operate two satellite constellations? One way would be if they didn’t have to.

The Sirius satellites should operate for at least another 7 or 8 years. In a few years, they will have to think about committing to contracts to replace them. They already have a contract to build a geo-stationary satellite. If they didn’t have to replace any satellites, this could be where they could save in the order one billion dollars or more. They could likely cancel the contract for the geo-stationary satellite as soon as the merger is approved for a penalty.

However, the only way they could do this is if they could use XM’s satellite to transmit the signal for both XM and Sirius. They wouldn’t have to do this until it came time to replace Sirius’ satellites; however, there could be cost savings by doing this earlier than later. It is unlikely that Sirius’ satellites would be of any use to any other entity. They could simply decommission them.

Although we can’t provide a link at present, it was said that Parsons indicated that XM’s satellites could broadcast over the entire satellite radio band. ITU filings seem to indicate that this is true. As we understand it, it takes 4 transmitters per satellite for XM to broadcast its signal, two feeds to each of the two antennae. However, to add the Sirius signal, XM would need only two spare transmitters per satellite capable of being tuned to the Sirius frequency, one for each antenna. In addition, each satellite would also have to have sufficient power to support the additional carriers.

From the technical specifications, the XM uplink is 50 MHz, plenty enough to upload both signals. The satellite can receive LHCP or RHCP, so, if necessary, two separate signals can be uplinked.

XM stated that they would pump 3,600 Watt into each antenna for the downlink, for a total of 7,200 Watt. The payload power is rated at 13,500 Watt, end of life, so they have nearly twice the power they need. Although we can’t confirm it just now, it has been said that the Sirius antennae have a higher gain, so less power would be required. Therefore, it seems that the XM satellites would have enough power to accomplish this.

The Transmitter Redundancy is stated as 4 x (11 for 8); therefore, if we are interpreting this correctly, they have the spare transmitters to add the Sirius signals.

Once they are transmitting on the XM satellites, the same repeater locations could also be used for Sirius. There could be some equipment changes to add the Sirius signal, but there is a good chance that this could be accomplished with relative ease.

The only problem is that the Sirius receiver antennae are optimized for a higher look angle. Reception would not be optimal, but it should be okay. After all, Sirius is planning on putting up a geo-stationary satellite.

Savings: one satellite constellation, station keeping, repeater operation, third party repeater feeds for the Sirius repeaters, and all the various facilities required to uplink the Sirius signal. It should easily be over a billion dollars in savings.

As a temporary solution, the “best of” content would be broadcast to both Sirius and XM receivers. From the merger on, or shortly thereafter, all radios sold or installed would receive only the XM signal. It doesn’t really matter, since they would be identical. Couple this will the hierarchical modulation techniques and they are able to add channel capacity for expanded content for the new receivers. The old receivers would continue to receive the basic signal. The additional content would be so advantageous that many subscribers would buy the new radios. Between the replacement radios and churn and the normal failures over time, most of the old radios on the retail side would be out of service in five years. They could drag the remaining subscribers kicking and screaming to the new service by issuing them new radios. This would be true to a lesser extent for the OEM receivers. At some point, they would have to say, “No mas”, and offer them a voucher to have the receiver replaced. This would finally free up the Sirius bandwidth. The next question is, "What would they do with the extra bandwidth?" Video? On the other hand, if the FCC were to say that they had to give up a license, this is a way they could accomplish it.

All this is all pure speculation on our part. We are not rocket scientist nor are we satellite engineers. Any rocket scientist out there that could comment?

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Saturday, March 03, 2007

Urge to Merge Part 8: What Satellite Radio Must Do

In our opinion, this is what satellite radio must do to get this merger passed. Our assumption is that the FCC and DOJ will accept a broad definition of the relevant product market; otherwise, the deal is dead on arrival.

1.Assuage their customers that their investment in satellite radio is protected and they will not lose content and that prices will be held in check. They have already done this, but they need to go further.

2. Demonstrate to the FCC that subscription prices will be held in check by market forces, and not by price guarantees.

3. Demonstrate that they need the entire bandwidth of both companies.

4. Demonstrate that they both have plans to implement hierarchical modulation techniques that will happen regardless of the merger. They need to put forth definitive timelines.

5. Successfully define the relevant product market such that it includes all sources or audio entertainment.

6. Demonstrate the substitutability between the relevant product market participants.

7. Successful define the relevant geographic markets such that the combined company is not a monopoly in any markets. NAB has given them some ammunition with which to work.

8. Demonstrably prove from where the purported cost savings and synergies will come. They will need to show a timeline for these savings. Their arguments will be picked apart, so no pie in the sky arguments.

9. Demonstrate that the cost savings are not at the expense of others. In other words, their market power won’t result in another entity losing; for example, that their combined market power won’t allow them to pay less for content or command higher advertisement rates. If someone loses, it is not a net public good.

10. Demonstrably prove in concrete terms how the cost saving will benefit the consumer.

11. Lip service to the public interest benefit is all important. All arguments must be framed with this in mind.

12. Offer concrete examples of how they intend to enrich the present content offering and how market forces will drive it, not promises.

13. Demonstrate technically how they will eventually integrate the services into a single service and how the consumer will be protected.

14. Demonstrate that the combined company will not be a detriment to terrestrial radio, that the combined company is no more a detriment than the two companies operating separately.

There are many other things that we are sure will come to mind.


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The Smoking Gun?

The Satellite Standard Group made an excellent find on the NAB's position on media ownership. We had hitherto took the position that the FCC would not consider satellite radio as part of the relevant product market. However, the NAB makes some convincing arguments that satellite radio, internet radio, mobile phones, and the like should be part of the relevant product market. Further, the attachment document found by following the source link gives all the facts and figures to back up their statement, and provides a mechanism to compare satellite radio to the local markets. NAB talks about the substitutability between the various products. That is a key word. Here's a look at some of their provocative statements:

Competition
In a multichannel environment dominated by consolidated cable and satellite system operators, broadcasters are clearly unable to obtain and exercise any undue market power. For this reason, the traditional competition rationale for maintaining a regulatory regime applicable only to local broadcasters and not their competitors is not a proper basis for keeping the current rules. Indeed, the primary competition-related concern in today’s digital, multichannel marketplace is the continued ability of local broadcasters to compete effectively and to offer free, over-the-air entertainment and informational programming that American citizens rely upon. NAB documents, in detail, the audience fragmentation and increasing competition for advertising revenue experienced by broadcast stations, as the result of new entry by cable television, satellite television and radio, numerous Internet video and audio applications, and mobile devices such as MP3 players. To best achieve the Commission’s goals of a competitive media marketplace that provides lower prices, better service and greater innovation to consumers, the Commission should now structure its local ownership rules so that traditional broadcasters and newer programming distributors can all compete on an equitable playing field.

A level regulatory playing field is particularly urgent, given that local broadcasters’ most prominent competitors enjoy dual revenue streams of both subscriber fees and advertising revenues.

Broadcasters, of course, are almost solely dependent on advertising, and local stations today must struggle to maintain needed revenues in a vastly more competitive advertising market.

Any realistic assessment of today’s media marketplace leads to the conclusion that competition considerations dictate change in the broadcast ownership rules.

Congress adopted the existing numerical station limits in 1996 before the emergence of satellite radio, Internet streaming of radio stations, the development of Internet applications such as podcasting, on-line music sites, music file-sharing and downloading, and the growth of mobile audio technologies such as MP3 players and even mobile phones.

XM and Siruis alone now put hundreds of channels of music, news, talk and sports into every local market in the United States, and earn dual revenue streams from subscriber fees and advertisers, all without being subject to comparable ownership restrictions.

In the Internet age, every local radio station is potentially competing against thousands of radio stations from around the country or the world, and estimated monthly audiences for Internet radio are over 52 million.

With satellite radio and a host of mobile gadgets, terrestrial radio stations now also face growing competition for listeners while consumers are in automobiles or outside the home or office.

The radio/television cross-ownership rule similarly does nothing to advance the public interest under current marketplace conditions. The rule is no longer needed to ensure diversity in local markets, but in its current form primarily serves to limit radio station ownership arbitrarily. With television and radio broadcasters facing unprecedented competition from cable, satellite television and radio, and audio and video Internet applications, a cross-ownership rule applicable only to local radio and television broadcast stations is inequitable and outdated.


Terrestrial stations have not been able to raise advertising rates due to "increasing competition for advertising revenue experienced by broadcast stations, as the result of new entry by cable television, satellite television and radio, numerous Internet video and audio applications, and mobile devices such as MP3 players." In other words, they no longer have market power due to raise their rates due to satellite radio and other competition. This is a good case for including terrestrial radio as part of the relevant product market for satellite radio. It is obviously that terrestrial radio feels satellite radio and internet radio bearing down on them, preventing them from exercising market power.

Not only is satellite radio and internet applications competition, it is "unprecedented competition".

The information in the "Attachments" is even more damning. Although we don't fully comprehend the method, they provide a way to directly compare satellite radio to the local stations. In the example, they say that satellite radio is equivalent to adding 20.7% increase in local, terrestrial stations to the market. We are not sure we agree with this, but it is in their own words:

Satellite Delivered Radio Programming

In addition to the increased number of local radio stations available in these
markets, additional radio programming is available from the two satellite radio
programming services – XM and Sirius Radio. XM Radio provides 149 programming
channels and Sirius 116 channels. XM Radio reported 7,185 million subscribers as of
September 2006, and Sirius Radio reported 5,119 million subscribers as of September
2006.

While data on the level of penetration are not publicly available on a market basis, we can calculate the added number of channels, on average, using the national penetration levels. Applying those subscribers across the total number of U.S. households results in a total penetration rate of 6.5% for XM and 4.6% for Sirius. Using those penetration rates and the corresponding number of total channels provided by these two services results in an average number of 15.1 satellite radio channels available in all of these selected markets, which equates to 20.7% more radio services over and above the average number of local radio stations discussed previously.


Here is a statement that says the terrestrial listening decline is directly related to satellite radio:

The percentage of listening to in-market commercial radio stations continues to decline, decreasing by 4.5-5.0% from the late 1990s level due in part to the introduction and adoption of satellite radio services.

In another place they say:

There has been a 4.5 – 5.0% decrease in the percentage of listening to local commercial radio stations in 2006 as compared to the late 1990s. Some of that listening is clearly moving to satellite radio services and/or streaming audio channels, as well as other terrestrial radio stations.

The following, in our estimation, is the smoking gun. In other words, they seem to say that the FCC would be remiss not to include satellite radio in the same relevant product market.

The results in this paper only confirm the earlier findings. The level of listening and viewing to out-of-market sources of programming has only increased. The introduction of satellite radio services and the significant expansion in the number of cable and satellite delivered national and regional video networks has considerably increased the level of competition in both the audio and video marketplace. Failure to include these outlets in any examination of local media markets would mischaracterize the explosion in listening and viewing options available to consumers.

The above is cited many times, many ways.

Calling Mr. Rehr... Calling Mr. Rehr [Satellite Standard Group]

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Thursday, March 01, 2007

Honda Patent Application: System and Method for Providing Weather Warnings and Alerts

Today, Honda had a patent application disclosed for a system and method for providing weather warnings and alerts using XM Satellite Radio. Although it does not say Honda on the application, we are reasonably sure that it is indeed a Honda patent application.


United States Patent Application 20070049260
Kind Code A1
Yuhara; Hiromitsu ; et al. March 1, 2007

System and method for providing weather warnings and alerts

Abstract

A method is provided for providing weather data to a vehicle comprising the steps of: (a) receiving a broadcast signal containing weather data referenced to a plurality of cells arranged in a grid corresponding to a geographic map; (b) determining the present location, speed, and direction of the vehicle; (c) calculating a geographic region for which the weather data will affect the vehicle user based upon the current location, speed, and direction of the vehicle; (d) filtering the weather data to yield filtered data comprising at least one of the plurality of cells correlated to the previously calculated geographic region; and (e) formatting the filtered data for display to vehicle occupants.


Inventors: Yuhara; Hiromitsu; (Rancho Palos Verdes, CA) ; Habaguchi; Masayuki; (Utsunomiya-shi, JP)
Correspondence Name and Address:
    Brian M. Berliner;O'MELVENY & MYERS LLP
400 South Hope Street
Los Angeles
CA
90071-2899
US
Serial No.: 510299
Series Code: 11
Filed: August 25, 2006

U.S. Current Class: 455/414.3
U.S. Class at Publication: 455/414.3
Intern'l Class: H04Q 7/22 20060101 H04Q007/22




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