HD Radio

Pioneer has been very vocal in their position with one particular “concession” that has been a frequent subject of the proposed merger between Sirius and XM. The audio equipment manufacturer believes that there should be no requirement to install HD radio chipsets in all SDARS receivers.

Pioneer met with the democrat commissioners (Copps and Adelstein) on Monday, July 21, 2008. This happens to be the same day that commissioner Copps rendered his decision to vote against the merger without taking the opportunity to offer a counter proposal for consideration.

It is Pioneers position that manufacturers should not be required to include HD Radio chipsets into SDARS receivers, and that in fact, a free market should determine whether or not these chipsets are installed.

One item to note is that Pioneer did not meet with commissioner Tate. Tate is widely seen as being the third vote needed for the merger to gain approval, and the fact that Pioneer did not meet with her may be indicative that she sides with the Pioneer position with regard to this issue.

[ FCC Filing ]

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Position: Long Sirius, XM.

In an interesting development in the proposed merger of Sirius and XM, General Motors and Toyota jointly issued a letter to the FCC stating their opposition to the requirement that HD be mandated in all SDARS receivers.

The letter states, ” The proponents of the proposed condition are seeking an unprecedented requirement regulating the choice of entertainment technologies in an automotive environment.”

GM and Toyota also point out that HD radio is already making inroads into the OEM channel without regulation.

Contrary to statements from Ibiquity that SDARS is blocking the ability of HD to be installed in cars, GM and Toyota point out, “Nothing in our companies’ respective agreements with XM inhibits our ability to offer HD radio.”

It has been my contention for quite some time that Ibiquity is seeking to avoid negotiations with OEM partners who may want not only subsidies, but a revenue share as well. By seeking a regulated installation, Ibiquity could piggyback on SDARS, and leave the OEM’s with nothing.

[ GM and Toyota Filing ]

Long Sirius, XM. No Position OEM’s

In a filing with the FCC some of the conversations between Ibiquity and commissioner Tate have become more clear. Specifically, Ibiquity wrote in an Exparte that they were responding to “certain issues raised in our meeting last week” (referring to a previous meeting between Ibiquity and Tate).

Questions Tate raised:

1. Tate asked Ibiquity to clarify the exact terms of the condition that Ibiquity has proposed (inclusion of HD chips in SDARS receivers).

2. The cost implications of any such condition.

3. The implications should the FCC adopt the Ibiquity proposal.

The answers from Ibiquity are as expected, but the interesting aspect is that Ibiquity estimates the cost of installing an HD chip to be $10 to $12. While the cost seems minimal, they are speaking purely in terms of the cost of the chip, and not getting into the costs associated with the overall subsidy for the installation, which is a substantial portion of the cost involved. Even at $10, the cost for 5,000,000 install would be a cool $50,000,000. Thus, not only is Ibiquity seeking to circumvent negotiations with OEM’s , but wants SDARS to foot the bill for the chipsets as well.

HD Radio may well be a great product, but asking SDARS to foot the bill is stretching things a bit far. Some believe that an open access condition would take the wind out of the HD proposal. This may be the case, but clearly Tate was considering the proposal in some manner.

Ibiquity FCC Filing

Position - Long Sirius, XM.

The NAB, iBiquity, and virtually every Congressman and Attorney General who steps in to this circus that we call a merger has been asking for the inclusion of HD chips into Satellite Radios. Of course, they never once mention who should pay for the design, installation, manufacturing, etc… but they claim they do it for the “benefit of the consumer.” Let us take a look at that claim.

As of 2008, less than 500,000 HD radios had been sold in the US. According to Bridge Ratings survey in August of 2007, less than 1 percent of respondents said that they planned on buying an HD radio in the next 2 months. There obviously is not a high consumer demand for the HD radio. Must be something else.

A quick google of HD Radio brings up a long list of places selling HD Radios at Retail. The average price is around $125, with some units running less than $100. The problem? According to John Gorman’s Blog, there are virtually no radios in Brick and Mortar stores for people to look at and play with. With such a new technology, you would figure that the HD radio alliance would be subsidizing those radios, to make them cheaper and more affordable.

Perhaps the HD advantage is it’s sound quality and ease of use? Nope, and Nope. Again Gorman cites multiple complaints about a large bulky antenna (which you have to move manually until you pick up the signal), signal’s fading in and out, and additional static on surrounding channels.

So what on earth can the HD Radio alliance and all of these top political figures mean when they say that HD radio is in the public interest?

Perhaps it is because it is the American Public that has been paying a large portion of the development costs for HD radio? Yup, that is you and I. An FCC filing from North Carolina’s Public Radio Stations cites “Just a few weeks ago, the House Appropriations Committee approved an additional $40 million to assist public radio stations’ transition to HD radio technology. Clearly the Congress supports our transition to terrestrial digital broadcasting.”

The Corporation for Public Broadcasting (CPB) is “A private, nonprofit corporation created by Congress in 1967, is the steward of the federal government’s investment in public broadcasting. It has already awarded well over 200 million dollars for the advancement of HD radio, and those awards are continuing to this date. A quick search for “Satellite Radio” “Sirius” “XM” or “SDARS” brings up only a single result: The award of “nearly” $2 million dollars in SDARS.

Yes, clearly Congress supports PUBLIC radio. Why then, does HD radio need Sirius and XM?

In a filing by the National Association of Broadcasters, there seems to be concern that satellite radio threatens the very viability and existence of AM, FM, and HD radio in cars. What a concept. Terrestrial radio is a wonderful service, and does indeed provide great programming, but to say that SDARS will push terrestrial radio out of cars is taking a bit too far is it not?

In thinking more deeply about what the NAB is saying, it highlights a fact that many often overlook. Terrestrial radio has gotten a free ride. Terrestrial pays no subsidies to install radios into vehicles. Not one thin dime is paid to Ford, GM, Toyota, Honda, etc. from terrestrial radio. Cars simply come with radios because that is what is expected. If radio makes billions in ad revenue, none is shared with Ford, GM, etc. In fact, the auto manufacturers get charged to put their ads on radio. Isn’t that grand! Ford pays their own money to install a radio into a car, and then pays again to advertise on that radio. Ford provides the platform for radio to be heard, and they get charged for doing so!

The NAB in, an effort to at least get something out of the deal, appears to be on the bandwagon of at least including an HD chipset into all SDARS receivers.

Ever wonder why OEM’s are not so quick to adopt HD? I have covered this issue in the past. OEM’s get money from satellite radio. HD through this point has refused to give OEM’s a revenue share. One can imagine how the negotiations conversation goes:

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In a meeting held with FCC commissioner Tate, Ibiquity outlined fears that the open access condition proposed in the merger between Sirius and XM would not ensure that HD radio chipsets get installed into receivers capable of receiving SDARS signals.

It is ironic that open access is heralded as a concept that is pro consumer, and a concept that gives consumers a better chance of getting what they want at a reasonable price. How then can something such as open access leave HD radio behind?

Perhaps HD radio is seeing what Pioneer sees. Pioneer has made staunch statements against a requirement to being forced to include HD into SDARS receivers. We noted the push back by Pioneer in or article “Pioneer Says No Thanks To HD Radio”

I have said it before, and I will say it again. HD Radio has a responsibility to market itself. They should not be out looking for business model hand-outs. They should not be trying to circumvent negotiations with OEM’s by getting into car dashboards on the backs of the negotiations that Sirius and XM have made, and by extension, on the backs of shareholders in the SDARS companies. Shareholders in Sirius and XM have suffered years of no profits to get the concept of SDARS to the point where it is now. The Ibiquity proposal, should it be accepted would allow HD Radio to waltz into existence without having to blaze a trail in the manner that Sirius and XM have.

The open access standard would take the manufacturing requirement away from Sirius and XM. It would allow any manufacturer to develop any type of radio they wanted. If U.S. electronics had a desire to make an HD radio that also received SDARS, they could do so.

This appears to be yet another attempt to grab the proverbial brass ring on the efforts of others, and an attempt to avoid negotiations with the Pioneers and U.S. Electronics of the world. It is time that Ibiquity stepped up to the plate themselves. It is time that they market their services. It is time that they tried to run their own business rather than trying to piggyback on the business of others.

Getting a service up and running is hard, but you need to put forth a bit of your own effort.

Ibiquity Filing With FCC

Position - Long Sirius, XM.

The Mini brand has seen tremendous and consistent growth in the United States. While the sales numbers have been growing, the car itself has not….until now. Beginning February 16th, the all new Mini Clubman will be hitting dealer lots. Mini fans can now enjoy a roomier ride whale maintaining the distinctive style of Mini.

Audio fans can also rejoice in that Sirius Satellite Radio as well as HD radio are available on the Mini Clubman. Pre-wiring for Sirius as well as HD Radio comes standard. For $1,000 you can add Sirius with a lifetime subscription, of for $500 you can add HD radio. As with all Mini’s, your options and combinations of features are nearly limitless.

Position - Long Sirius

The HD Radio Digital Alliance has taken a tact on the merger that goes against Ibiquity, and they have filed that opinion with the FCC. Ibiquity, the company behind HD Radio has not taken an official stance on the merger. Instead they are requesting that all satellite radio tuners be equipped with HD radio as a condition to the Sirius/XM merger, and that satellite radio deals with auto manufacturers be terminated. The Alliance comes out and states that they oppose the merger. Is this a rift in the HD Radio community? Only time will tell.

The Alliance starts off their letter by stating that at this point it can not be considered a competitive alternative to satellite radio

1. According to their website they already have 1,133 stations on air right now.

2. According to their website there are 1,471 stations licensed

3. According to their website they have over 3,000 stations committed, and 402 are already multicasting.

4. The Alliance touts that they are subscription free, and even has sales kits to compete directly with satellite radio.

5. HD Radio already has deals with auto manufacturers, and the Alliance website even sports new car window stickers that show HD Radio as an option in the car.

The Alliance states that there are barriers that exist because of satellite radio’s deals with auto manufacturers.

Volvo, Ford, Jaguar, Hyundai, and BMW all have deals with HD Radio.

The argument that the Alliance makes is that Sirius and XM have far more relationships with auto manufacturers than does HD Radio. The important distinctions that the Alliance leaves are are…

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Ford Motor Company announced today that they plan to offer HD radio in their vehicles as a dealer installed option across nearly all 2008 product lines. The radios can also be installed in most 2005 and newer vehicles. The radios, like Ford’s Sirius installations are compatible with Ford’s SYNC program.

While some may feel that this move is threatening to Sirius (Fords satellite radio partner), that sentiment could not be further from the truth. The digital age is here, and automakers are beginning to respond to the wide variety of choices available to consumers. In the end, the content will dictate which technologies are more widely accepted, but the key is the ability to offer their customers a diverse choice to consider.

“We believe HD Digital Radio will be an important part of Ford’s commitment to delivering innovations with mass appeal,” said Kim Irwin, Vehicle Personalization and Accessories manager for Ford’s Customer Service Division. “We’re helping our customers stay connected by supporting the features and functions they want in their vehicles. The dramatically improved audio, text and data features of HD Digital Radio - along with its hundreds of new radio stations - create a compelling combination at the right price.”

HD radio, along with traditional radio, Internet radio, and i-Pods have been identified as competitors by Sirius and XM as they propose to merge. The announcement today that HD will be widely available in one of the “Big Three” automakers is a conclusive step in demonstrating that there are several forms of competition. What I would love to see is a single radio offering an across the board offering.

Position - Long Sirius, Long Ford

As many already know, BMW is a Sirius OEM partner that has also been leading the way in bringing HD radio and I-Pod integration as optional or standard equipment in their cars. Recently it was announced that BMW controlled Mini will now be launching a program as well.

Beginning in June 2007, Mini will be offering HD radio as an option to consumers. The option comes at a standalone price of $500. Interestingly, Mini is also offering the HD radio as part of the “audio package” which includes a beefed up HI-FI system as well as a Sirius lifetime subscription (the subscription alone is valued at $500). That package retails for $1,400. Mini’s come standard with the pre-wiring for both Sirius and HD radio.

Referencing the HD radio announcement, Richard Steinberg, head of Mini USA product strategy stated, “We are pleased to offer our customers the high-quality sound of HD Radio broadcasting in the new MINI Cooper and Cooper S hardtops.” Steinberg also noted, “HD Radio broadcasting now offers our customers an additional level of choices when it comes to premium, in-car audio technology.”

It seems that Mini see a value in combining the ultimate choice in audio features for their customers. Whether you like I-Pods, HD, or satellite radio, Mini has you covered.

Position – Long Sirius, Long XM