hd.jpgThe 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...

1. Sirius and XM have spent a great deal of time and money to get to the point where they are today. Many OEM's are just now getting meaningful penetration into their automobiles.

2. Sirius and XM subsidize their inclusion into the dashboard. Has HD Radio or the Alliance offered compelling enough subsidies to sway the OEM's into putting HD receivers into cars?

3. The alliance speaks as if the exclusive deals disallow HD radio. This is not the case. Ford has an exclusive deal with a satellite radio provider (Sirius), but there was nothing precluding HD from making a deal with Ford.

4. Satellite radio offers the auto industry residual income by way of a subscription revenue share. Has HD radio come to the auto industry offering ad revenues? Perhaps this is a stumbling block that HD Radio and the Alliance are experiencing, and the merger is simply an excuse.

Many of the challenges that HD Radio faces will be challenges regardless of whether or not there is a merger between Sirius and XM. For HD Radio, the hope of not having to give up revenues and to get a requirement for inclusion into satellite radio receivers is a gold mine. The OEM argument is not very relevant, in that there is nothing to preclude HD Radio inclusion in the contracts. This has already been demonstrated in the deals that HD radio has entered into thus far.

The challenges HD Radio faces are hard. Any person that has followed satellite radio for any length of time can attest to this. In actuality, the is the precise reason that Ibiquity has taken the stance they have. The merger of Sirius and XM gives them perhaps their ONLY opportunity to fore-go some of the challenges of getting exposure to consumers. If there is no merger, then HD radio has the uphill battle that Sirius and XM have already faced in front of them. The merger actually has a potential (if the Ibiquity proposal is considered), to give HD radio a shortcut to consumers that they would otherwise not have. Will the HD Radio Alliance filing throw a wrench in those works? Perhaps, but doubtful. Ibiquity is the voice of HD Radio and the FCC is well aware of this.

Position - Long Sirius, XM