Exploring The Validity Of Sirius XM Price Increase Rumors
When I first read up on rumors that Sirius XM was considering price increases on certain packages, my initial reaction was that they must be false. I then questioned to myself that a potential loophole may exist and thought I had better research the possibility before coming to any conclusions.
Although many of the rumors sources seem to extremely credible, my opinion is now that they cannot be true. With the loss of Kevin Martin and the expectation of a democratically controlled FCC, Sirius XM would be risking their licenses if they were to increase prices in the time frame rumored. The FCC memorandum makes it abundantly clear that:
- No price increases can occur for 3 years:
- The company may ask for a review 6 months prior to the 3 year anniversary:
- That the 3 year price freeze applies to all tiers and packages that the company already offers:
- That the FCC must approve any price increases
The order itself states:
II. PRO-CONSUMER
With daily rumblings about a possible recession – and nearly universal consensus that we are in a pattern of economic slowdown – good economic policy from our government is more important than ever. It is not the job of the FCC to prop up failing companies. However, it is our job to support efficient and affordable radio communications. Section 7(a) of the telecommunications Act says, “[i]t shall be the policy of the United States to encourage the provision of new technologies and services to the public.”The Commission aims to ensure audio options that provide lower prices, and unique choices such as“family friendly programming” tiers. Through this Order we ensure that for at least three years consumers will see a price cap on every price tier and package that the merged entity offers. The FCC will revisit the need for this price cap six months prior to its expiration.
IV. PRICE CAP
Because SDARS is a relatively new service, and prices have remained constant, it is difficult to anticipate how a merger will affect future prices. The parties have agreed to a three year price cap on the services they currently offer. This is not a sufficient fix to prevent the anticompetitive pricing schemes that could arise as a result of this merger. Thus, the Order imposes a review by the Commission before the lifting of the price cap in three years. At that time the merged entity will have the burden of demonstrating to the Commission that lifting the price cap will not result in the merged entity raising and holding prices at a level they could not otherwise maintain, but for the lack of competition in the satellite radio market.
Maybe they negotiated something with the FCC, since the FCC had screwed them royally with the delay.
This shouldn’t be that difficult to figure out. They change a few things and relabel a bit and it becomes a “new” package and not one that they already offer thereby getting around what has been stated from the agreement.
I can see part of it: They are not increasing the price on the service, they are simply taking away the availablility of free internet radio. Now, users will have to pay for the internet feed if they want it, or can choose not to have it. It avoids all of the pitfalls of the FCC ruling.
I don’t know how they are raising the additional sub price, because to me, I see that as a “package” deal, since an initial sub is still needed.
Newman, I agree with you that they can charge for new services. They could argue that the internet service while free was a Beta Test program offered to existing customers while being perfected. The internet royalty agreements need to be paid for, especially if they are to expand them to portable devices with Wifi.
While it is true that their is a 36 month cap on subscription prices with an FCC review after 30 months to see if the cap warrants being continued. It is also true and written into the conditions that:
“After the first anniversary of the consummation of the merger, we (the company) may pass through cost increases incurred since the filing of the combined company’s FCC merger application as a result of statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees. We will provide customers, either on individual bills or on the combined company’s website, specific costs passed through to consumers pursuant to the preceding sentence.”
This isn’t a loophole to raise prices this is an FCC agreed to conditions. It won’t happen on March 11th though but it will happen around August 5th.
the basic packages or tiers arent changing its the cost for adding an additional receiver or internet service–This seems to be seperate from the normal packages
I was on the phone last night with a CSR girl. I had re-upped for the 3 year plan with best of XM on my primary back in Oct. Well a few days ago I saw the offer for a lifetime sub for less than what I paid for 3 years, so i called and asked if they would switch my plan and I would pay the diff for best of. She was more than helpful and knowledgable. During that call I asked if there was any talk on getting a plan for everything Sirius and everything XM together. She told me that on Mar. 11 there was going to be some big additions/ changes to plans that people should be “excited” about. She wouldn’t confirm the Everything deal, but said that it was MArch 11th and a lot of changes were going to be made.
The specific concessions with the FCC relating to rates on programming and Capped Pricing were as they were specifically identified in the concession document. No other programming applies. This is what is capped in the FCC Concession Agreement.
1. The combined company agreed to not raise the retail rate for its basic 12.95 per month subscription package
2. The a la carte programming: 50 channels for 6.99 and 100 channels for 14.99 per month
3. The Best of Both Programming for basic Sirius, XM, or 100 channel A la Carte subscribers for 16.99 per month
4. Mostly Music or News, Sports and Talk Programming for a cost of 9.99 per month
5. Discounted Family-Friendly Programming: basic Sirius or XM programming for 11.95 per month and Best of Both for 14.99 per month
No where in the agreement is Internet Radio even discussed and the additional expenses as I outlined above apply after 1 year. The March 11th date can be put into effect for Internet, whenever they like without recourse per the agreement and the additional costs that are a result of statutorily or contractually required payments as I outlined above can and probably will be passed on after 1 year.
In addition, there is no reason the company can’t continue making the programs they agreed to offer during the FCC process available, and with the capped prices, while developing new program prices. There is no restriction on them from the FCC agreement to run their business more effectively and profitable than they offered to the FCC. Any new package developed that offers, other than monthly pricing, with discounts to consumers is their prerogative. If a consumer wants to pay more for less because the FCC agreed to it so be it.
Welp…. I have a car dock for my Stiletto 2.. Time to cancel the OEM radio and use the plug and Play.. Mel is dumb.. Sirius XM is not the only ones hurting right now.. People will cancel one sub to off set the price increase. I am not hurting, but one of the merger condition was NO rate increases for THREE YEARS… Anyone remember George H. W. Bush? Read my lips, NO NEW TAXES~! How did that work out for him?? ONE and done.
Honestly.. They should CUT pricing and give the “best of’s” free and hope to gain MORE customers.. After the Superbowl I may just shut it all down. The experience is ruined, the channel line up sucks, and the commercials are increasing, and Stern is never at work…
I’ve been an XM subscriber since 2002. Loved it! Have not listened to FM since. I’ve convinced a number of friends to get it too. I now have it in 2 cars, and a portable, and we stream it in my office. I was totally against the merger. Without competition, of course we’ll get raped. I’m already paying $27 per month, and now they want $34.
And the programming has totally sucked since the merger. When I was trying to decide between XM and Sirius, every salesperson told me Sirius was more repetitive. I did not want to hear the same old stuff. I chose XM, and have thoroughly enjoyed the breadth and variety of the programming, and the DJ’s were just right. Now if you listen to a channel, you hear the same songs every day!! Variety is way down, and the channels that are from Sirius are just FM rehashed.
This quote comes right off a press release last July, which is still posted on XM’s web site: “I am delighted to announce the completion of this exciting merger between SIRIUS and XM,” said Mel Karmazin, CEO of SIRIUS XM Radio. “We have worked diligently to close this transaction and we look forward to integrating our best-in-class management teams and operations so we can begin delivering on our promise of more choices and lower prices for subscribers.” And if you believe this, Mel will probably refer you over to Bernard Maddoff for investment advice.
And here’s a quote right off CNET’s web site: “Republican Commissioner Deborah Taylor Tate cast the tie-breaking vote after the companies agreed to a three-year cap on prices…”. If there’s a three-year cap on prices, why do I have to start paying $37 next month for crappier programming? I will probably just let my subscriptions lapse. I am so disgusted with all this big business bait-and-switch. Just like the mortgage industry, no one to police them after the republicans turn them loose.
Everyone should be sending emails to the FCC and Deborah Taylor Tate to protest this dishonest price increase. They said prices would be going down. Just read their press releases and stock offerings about how much money they are going to be making in 2009 and after, due to the merger!! This is totally despicable. Sirius and the FCC have totally screwed millions of listeners.
”The Commission aims to ensure audio options that provide lower prices, and unique choices such as“family friendly programming” tiers. Through this Order we ensure that for at least three years consumers will see a price cap on every price tier and package that the merged entity offers.”
Consumers = subs?
Loophole- This would only apply to existing subs, new subs are fair game???
I see no wording or anything that says, new subs would be treated as existing subs!!
If anything existing subs can move on with the status quo, new subs get the reach-around!!!
Please verify if I am wrong!!! 🙂 THANKS!! In advance!!!