[IP] more on Thoughts on XM, Sirius, and playing by the rules

[David Farber <dave@farber.net>]

Begin forwarded message:

From: Patrick Ross <Pross@pff.org>
Date: February 20, 2007 7:49:00 AM EST
To: dave@farber.net, ip@v2.listbox.com
Subject: RE: [IP] Thoughts on XM, Sirius, and playing by the rules

" Sorry boys, but 'we're
still losing money' isn't an excuse -- you both knew the ground
rules when you signed up."

I'm sorry, Lauren, but rules are meant to change with the times, from  
big ones such as "only white men with property can vote" to more  
minor ones such as the spectrum rules that had to be changed to allow  
services such as wireless phones and wi-fi.

When the sat radio rules were put in place, there was no HD radio, no  
Internet radio, no iPods, no iTunes, no Napster to Go, and no music- 
enabled cell phones. The market has changed. You see a market of two  
providers going to one. I see a larger digital music and talk market  
with two competitors in it hemorrhaging money, and they have merger  
restrictions on them none of their competitors do.

You say XM can't really charge you more than they do. So what are  
their alternatives to profitability? You seem to assume these  
services would keep operating at a loss just to keep you happy.  
Actually, you're lucky there are so many absurd spectrum rules in  
place; if spectrum were treated like property (as it should be) XM  
and/or Sirius would long ago have sold their "land" to someone who  
could make money off of it, and it wouldn't have been satellite radio  
I'd bet.

For the sake of those who find value in seeing satellite radio  
continue, I hope the FCC and DoJ find the backbone to approve the  
merger.

Patrick Ross


 -----Original Message-----
From:   David Farber [mailto:dave@farber.net]
Sent:   Tuesday, February 20, 2007 07:24 AM Eastern Standard Time
To:     ip@v2.listbox.com
Subject:        [IP] Thoughts on XM, Sirius, and playing by the rules



Begin forwarded message:

From: Lauren Weinstein <lauren@vortex.com>
Date: February 19, 2007 11:35:14 PM EST
To: dave@farber.net
Cc: lauren@vortex.com
Subject: Thoughts on XM, Sirius, and playing by the rules


Dave,

There will be plenty of analysis of the proposed XM - Sirius merger,
from a variety of economic, technical, and political standpoints.

I'd like to briefly focus on just two points for now.

First, the risks to both companies in a merger, in terms of actually
alienating their existing customer bases, is significant.  XM and
Sirius both have different styles and operating philosophies, and
their subscribers tend to be very much niche-oriented.  As an XM sub
myself -- who happens to feel that the service is balancing right
now on the edge of being too expensive for the value received, I
know that significant changes to my personal favorite niches would
cause me to drop the service flat -- even if a la carte options were
available.

But this is merely a business consideration, let's look at something
that should be more important.

As I understand it, a foundational element in the granting of the XM
and Sirius licenses was that they not merge.  The talk is that the
merger has been pursued at this time since it was deemed more likely
to succeed under the Bush administration.  In other words, if you
don't like the way the game has been going, try to get rules
changed.

Despite the protests of XM and Sirius to the contrary, the current
situation is very much analogous to the proposed DirecTV - EchoStar
(Dish Network) merger which was turned down by the FCC.  The outcome
in the XM - Sirius case should be the same.  Sorry boys, but "we're
still losing money" isn't an excuse -- you both knew the ground
rules when you signed up.

Of course, there are lots of details and issues surrounding this
situation, that will be explored in many venues.  But as it stands,
both XM and Sirius were permitted extremely valuable franchises under
clear rules, and if the FCC has any backbone they'll require both
firms to stick by those rules.

Initial comments by the FCC Chairman seemed to suggest that a merger
was unlikely to be approved -- but later remarks appear to be wavering
a bit already.  Some financial analysts seem to be assuming that
the FCC will ultimately keel over on this one -- perhaps hoping
that the "do it now while Bush is in office" theory is a solid one.

We shall see.  More to come.

--Lauren--
Lauren Weinstein
lauren@vortex.com or lauren@pfir.org
Tel: +1 (818) 225-2800
http://www.pfir.org/lauren
Co-Founder, PFIR
    - People For Internet Responsibility - http://www.pfir.org
Co-Founder, IOIC
    - International Open Internet Coalition - http://www.ioic.net
Founder, CIFIP
    - California Initiative For Internet Privacy - http://www.cifip.org
Founder, PRIVACY Forum - http://www.vortex.com
Member, ACM Committee on Computers and Public Policy
Lauren's Blog: http://lauren.vortex.com
DayThink: http://daythink.vortex.com




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