Sirius and Xm Satellite Radio Satellite Radio Term Paper

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Sirius and XM Satellite Radio

Satellite radio has emerged in the past few years as the hot new trend in broadcasting. Operating similar to DirecTV, satellite radio companies bounce their signals off satellites to beam high-quality digital service coast-to-coast, offering exclusive ad-free programming. Satellite radio offers listeners the opportunity to hear any show anywhere in the United States, combining the benefits of premium quality sound and convenience when traveling on the road. Research indicates that similar to the way FM radio grew against dominant AM radio, satellite radio is becoming known for "edgier" alternative programming (McCarthy, at http://www.usatoday.com/money/media/2004-10-6-radio-compare_x.htm). The entire satellite radio industry is currently made up only two companies, XM Radio, which started broadcasting in 2001 and has 2.5 million customers, and Sirius, with 600,000 subscribers since going live in 2002. This paper will offer a comparative analysis of the two companies and a general overview of the satellite radio industry itself.

Overview of Satellite Radio

Just as many TV viewers have come to consider cable TV a life necessity, so too is satellite radio becoming a mainstream replacement for traditional AM/FM listening. Similar to cable, this service has to be paid for, but just as with cable, you get a lot more channels and edgier, more innovative programming. An additional benefit is that there is no loss of your favorite station as you travel across the state or country. As an added plus, satellite players show the artist and name of the song, which is definitely an incentive for those who like to know what they're listening to. I

In 1992, the U.S. Federal Communications Commission (FCC) allocated a spectrum in the "S" band (2.3 GHz) for nationwide broadcasting of satellite-based Digital Audio Radio Service (DARS) (Gustafson, at http://ezinearticles.com/?Sirius-SatelliteRadio-vs.-XM-Satellite-Radio-- -- which-streams-should-you-choose/). Of the four companies that applied for licenses, only two were granted rights to broadcast; Sirius (formerly CD Radio) and XM (formerly American Mobile Radio). Each company has satellites in orbit above the earth to transmit their programming. Programs are beamed to one of the satellites, which then transmits the signal to the ground, where your radio receiver picks up one of the channels within the signal (Gustafson, at http://ezinearticles.com/?Sirius-SatelliteRadio-vs.-XM-Satellite-Radio-- -- which-streams-should-you-choose/). Signals are also be beamed to ground repeaters for listeners in urban areas where the satellite signal can be interrupted.

In many ways, research on the industry indicates that Sirius has set the tone for the industry, being the first to offer commercial free programming on all its music channels and has larger selection of receivers, adapters and other products. XM has a cheaper subscription fee, at least for its basic plan, which offers much the same fare as its competitor. Both providers have partnered with automobile manufacturers to offer satellite radio in new car models. Each has systems that will search the channels for your favorite music and alert you when and where the songs are playing. A further comparative analysis is offered in the paragraphs that follow.

Research indicates that satellite radio is in the very early stages a predicted long, multi-year growth curve. There are over 208 million drivers in the United States, and most of those drivers listen to traditional broadcast radio during their daily commutes or on the way to their local convenience store (Tracey, at 23). In 2004, Americans purchased over 28 million car radio systems, 17 million installed into new vehicles and 11 million sold for installation into used cars (Tracey, at 23). Much like cable, satellite radio offers a wider choice for consumers. Even in large metropolitan areas like New York and Washington DC, there are only 15 to 20 broadcast radio stations available (Tracey, at 23). Outside of the major cities, the programming choice is even narrower, whereas satellite radio offers 100-plus channels available literally anywhere in the United States.

One key to the industry's strategy is that satellite radio is not limited by the geographic boundaries that govern regular radio stations. With the potential to reach people across the country, even channels of relatively narrow interest, classic country and western or pop music just from the 1970s, for example, can reasonably be expected to attract a large enough audience to justify their existence, according to industry analysts (Silverstein, at http://www.space.com/businesstechnology/technology/satcom_radio_industry_031112.html). Secondly, satellite radio companies are creating an array of channels to appeal to every taste. For example, XM offers 122 channels, consisting of 68 commercial-free music channels, 33 news, sports, talk and entertainment channels, and 21 weather/traffic channels (McCarthy, at http://www.usatoday.com/money/media/2004-10-6-radio-compare_x.htm). Sirius offers 120 channels, consisting of 65 commercial-free music channels and 55 channels of sports, news, talk, entertainment and weather (McCarthy, at http://www.usatoday.com/money/media/2004-10-6-radio-compare_x.htm). Sirius is also the satellite radio of the NFL and broadcasts live NFL and NHL games.

As with any service, there are start-up costs associated with satellite radio. Potential subscribers have to start by purchasing special receivers and antennas, which cost around $150 at retailers such as Wal-Mart, Sears, Best Buy or Circuit City. Units are available for homes, cars and boats, but each unit takes a separate subscription, with some portable units that can be moved from the car to home and back again. Besides hardware, consumers also have to subscribe to either XM or Sirius. Sirius costs about $12.95 per month or $142.50 for a year, and also offers service this year for $499.99 for the lifetime of a consumer's radio (McCarthy, at http://www.usatoday.com/money/media/2004-10-6-radio-compare_x.htm). XM costs a flat $9.99 per month.

Critics of the satellite radio industry and service have expressed concerns that satellite radio will lead to a decline in the number and variety of local radio stations and programming and greater concentration of mass media in the hands of fewer companies, and a loss of jobs in the radio industry. Satellite radio has also gained popularity in other countries as well. In Britain, satellite radio is delivered by Sky Television, as part of their satellite television service. As of June 2004, there were around ninety radio stations on the Sky Digital service. Unlike in the United States, where satellite radio is seen as a way of gaining additional choice, in Britain, most major radio stations also simulcast on satellite radio. Reception is currently limited to stationary receivers, and is not available in automobiles yet.

In November of 2004, the Canadian Radio-Television and Telecommunications Commission began hearing applications for Canada's first satellite radio operations. Currently, three applications have been filed: one by Standard Broadcasting and the CBC in partnership with Sirius, one by Canadian Satellite Radio in partnership with XM, and one by CHUM Limited.

CHUM's application is for a subscription radio service delivered through terrestrially-based transmitters rather than directly by satellite, although satellites would be used to deliver programming to the transmitters. The CHUM service is all-Canadian whereas the other two applications propose to offer a mix of Canadian-produced channels and existing channels from the American partner services. A small gray market already exists for Sirius and XM receivers in Canada. Worldspace has its own satellites covering most of Europe, Asia and Africa. This signal can be received by specialized Worldspace receivers, however, a lot of the programs are only available to subscribers.

Overview of Sirius Satellite Radio

Sirius Satellite Radio Inc. was one of two winning bidders at an FCC auction in April 1997 for a license to operate a satellite digital audio radio service, and in July 2002, launched its service nationwide in the U.S. Sirius' programming originates from its national broadcast studio in New York City, and in November 2004, named Mel Karmazin as its CEO pursuant to a five-year contract (Sirius Satellite Radio, at http://research.businessweek.com/business_summary.asp?Symbol=SIRI). The company counted over 1.1 million subscribers as of December 31, 2004. Sirius radios are primarily distributed through automakers and retailers. In the auto market, the company has agreements with Ford Motor Co., DaimlerChrysler Corp., BMW of North America, Nissan North America, Volkswagen of America and Porsche Cars North America to offer Sirius radios as both factory and/or dealer-installed features (Sirius Satellite Radio, at http://research.businessweek.com/business_summary.asp?Symbol=SIRI).

Sirius distributes its service through special markets such as trucks, boats, recreation vehicles and aircraft. In the autosound aftermarket, Sirius radios are available for sale at national and regional retailers, including Best Buy, Circuit City, RadioShack, Wal Mart, Ultimate Electronics, Tweeter Home Entertainment Group, Crutchfield, Good Guys, Office Depot, Target, Kmart and DISH Network outlets, up to around 25,000 retail locations as of December 31, 2004 (Sirius Satellite Radio, at http://research.businessweek.com/business_summary.asp?Symbol=SIRI).

Sirius offers a host of equipment options. Customers can choose from over 15 plug and play options. Average receivers sell for $99.95 and can be combined with a car or home adapter, or a choice of different boomboxes. For the same $99.95, the Sirius Sportster adds special features for the sports enthusiast such as Game Alert, which prompts you when your favorite NFL or other sports teams are playing and Game Zone, which lists all of the play-by-play games and scores on Sirius by league. For $149.99, all listening needs can be covered with the Sanyo CRSR-10 Plug & Play…[continue]

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