Many satellite radio investors feel that satellite radio is the best audio entertainment option in the marketplace. It is a feeling that is easy to agree with. After all there are well over 100 channels of audio entertainment that carries any genre of music, news, sports, and uncensored talk. Satellite radio has the goods to be a media dominating giant.
It is perhaps the consumer acceptance of satellite radio that terrestrial radio is so eager to get the FM signal mandated on cell phones. Now before passionate satellite radio begin saying that this does not matter, stop and think again. Currently music and audio entertainment on smart phones is available in many formats. Services like iTunes, Sirius XM Internet Radio, Pandora, and Slacker are the key choices. There are dozens more as well. Some terrestrial radio stations even have apps. So why would terrestrial radio being broadcast over cell phones be such a big deal?
The answer is in royalties. Playing music over the Internet costs more than playing it over the airwaves (be it terrestrial or satellite). It costs Sirius XM and the others more to deliver the latest Maroon 5 song than it does terrestrial. Terrestrial is seeking to get FM tuners integrated into cell phones. This would mean that consumers will have easy access to the stations they are familiar with as they run, ride the train, or simply walk the dog. Having an ad based business model, terrestrial radio can boast more listeners for more hours, and everyone would literally have terrestrial radio in their presence 24 hours a day.
The new site launched by the NAB is RadioRocksMyPhone and it is full of information about cell phones that are already capable as well as details on the fight to get all cell phones FM tuner ready. While the concept of a terrestrial radio tuner on a cell phone seems like a no brainer, the resistance is coming from the cell manufacturers. They do not want to be required to install a tuner. To solve this the NAB is taking a trck of introducing the concept of consumers paying a one-time fee to have the capability. The debate continues, and the issue is far from resolution.
Should satellite radio investors fear this development? The answer is no. There is plenty of room. The only reason to fear it is if satellite begins to lose it's uniqueness in terms of content. That is the real battle front. having terrestrial radio on all cells will likely happen. It is just a question of when. Yes, it means another competitor in the cell arena, but in reality Sirius XM does quite well despite the existence of terrestrial, Pandora, Slacker, etc. The key is knowing the landscape and understanding that change will happen. Sirius XM needs to stay cutting edge in cars, on cells, and on the Internet. The content, and the ease of access to it will deliver the listeners.
Position - Long Sirius XM