The interoperable issue is now in the forefront of the proposed merger between Sirius and XM. With organizations bringing the issue up several times lately, and Sirius and XM responding, it is clear that there now exists a debate about exactly what the intent of the mandate was or is.
In a filing with the FCC, an organization known as Blue Sky Services has sided with the NAB Coalition with respect to the definition of the interoperable mandate.
Citing SEC filings by Sirius and XM, Blue Sky states that Sirius and XM have changed their own interpretation of the interoperable mandate over the years from development and deploying an interoperable radio to simply developing a receiver.
Blue Sky quotes from the XM and Sirius Joint Development Agreement where the companies outlined the following:
"Whereas, the parties desire to comply with FCC licencing requirements to enhance efficiency and consumer welfare by jointly developing and deploying certain interoperable technology for the purpose of producing radios capable of receiving broadcasts from both the XM radio system and the Sirius radio system;"
The issue at hand is not the interpretation of Sirius, XM, or any organization, but rather the interpretation of the governing body that initialized the requirement, which would be the FCC.
Certainly, over the period of years since the interoperable mandate was developed, the companies have been working with the FCC on exactly what was required of them. Even if at one point they believed that it was their responsibility to "deploy" such a device themselves, it is still subject to interpretation over a period of time.
Assume for a moment that the companies did develop, and deploy only "interoperable" devices from the very beginning and it was an overwhelming success. What exactly would have transpired? Would organizations such as the NAB have charged collusion? Would consumers be switching back and forth between services? Would a-la-carte pricing have come into the picture?
Another aspect is defining "deployment". Is deployment making the technology available for manufacture? Does deployment mean that the companies MUST subsidize a radio that they may not get a subscription from? From the Sirius and XM perspective, they have indicated to the FCC that they have developed the radio, but manufacturers are making the choice not to manufacture such a radio.
In the end, the decision rests with the FCC. The companies have certified that they have complied with the mandate. In fact, they made this certification two years ago. The FCC has not made a determination as to the status of compliance. The issue rests with the regulator, not the companies or other organizations.
Interpretation is a funny thing. One can walk around in Texas with a hand gun strapped to their hip, but try to do that in Connecticut. There is a "right to bear arms", but it has MANY interpretations, and in fact, those interpretations have changed over time. Those four simple words, Right To Bear Arms", have taken on definitions that include certain guns but not others. 8 bullets in a clip is okay, but 16 bullets is taking it too far. A revolver is fine, but an M-16 is too much.
While reaching a determination on the interoperable mandate is a desirable task, the focus should rest on the mandate of the FCC with respect to the merger. Is the merger in the public interest? That is the important question at hand.
Even if the FCC were to render a decision on the interoperable mandate, how, from a consumer perspective does it impact the decision to allow or not allow the consolidation of these companies?
Yes, from a shareholder perspective the interoperable mandate decision may carry an impact. However, that is a separate discussion from what will benefit consumers. The FCC is not the regulator that deals with the shareholder side of the equation.
It is time that the regulators look at what MAY BE rather than what COULD HAVE BEEN. The COULD HAVES can be resolved at any point in time. The MAY BE'S are still at a stand still awaiting an FCC decision on the license transfer.
The issue is in the court of the FCC and has been for two years.
Position - Long Sirius, Long XM