The merger between Sirius and XM has happened, but the issue was not totally resolved with the FCC when the decision to allow the companies to merge was announced. With the announcement of the approval of the license transfer, the FCC took it upon itself to investigate the possibility that HD radio technology should be included in 100% of satellite radios manufactured.

The file on the issue has had a spattering of comments from manufactures, Sirius XM, Ibiquity and others, but the debate has been rather slow…until now. Over the past couple of days, the HD issue has begun to heat up.

The first salvos came early on, and there was little discussion and debate, but rather various companies and organizations offering up an opinion, or jockeying for position. Comments from Ford, GM, and Toyota that oppose the requirement were strong statements, but it is a recent comment by the Association of International Automobile Manufacturers (AIAM) that perhaps is the most damning yet of forced HD inclusion. AIAM includes Aston Martin, Ferrari, Honda, Hyundai, Isuzu, Kia, Maserati, Mitsubishi, Nissan, Peugeot, Renault, Subaru, Suzuki, and Toyota. The organization offered up very strong arguments such as the fact that the forced inclusion would add costs to cars for a product which as yet is uproven as a desire from consumers.

Other interesting filings include:

Continental, a parts supplier to the auto industry, calls HD inclusion in theior FCC filing the “Anti A-La-Carte” proposal and warns that forced integration is a slippery slope that would propel Ibiquity to instant market parity through regulation instead of market success.

The Coalition of Organizations for Accessible Technology (COAT), offers support for HD Inclusion. Their argument states, ” Like any other consumer group, many of the over 50 million people with disabilities inthe United States listen to radio for news, information, music and other entertainment. They listen to over-the-air broadcasts, they pay for radio programming in their cars, and they want the
benefits of any new radio technologies, particularly if these offer a means of accessibility.”

While I have compassion for people with disabilities, I would stop short of saying that mandated HD inclusion into SDARS receivers helps those that are disabled in any meaningful way at this point. COAT does not address costs associated with the issue, but rather relies on a “the more the better” type of mentality.

It would not be a debate without comments from the National Association of Broadcasters (NAB). As you can imagine, the NAB wants the inclusion to happen. They still maintain their “monopoly” stance, and justify the forced inclusion by stating that Sirius XM are being some sort of “bully” in wanting to see HD take the journey of getting acceptance in much the same way Sirius and XM did. The NAB states, ” Unsurprisingly, Sirius XM opposes any Commission action that would enable consumers to more conveniently access competing technologies with their monopoly satellite radio services.”

I would submit that the issue is less about convience to the consumer, and more about the dollars behind the inclusion. Sirius XM have stated as part of the merger that they would allow any manufacturer to include any capability in receivers. Thus, HD inclusion is allowed to happen as a function of demand.

NPR, an opponent of the merger, and proponent of HD inclusion gives HD radio a lot of credit, citing, “The Commission has pledged its support for the HD Radio technology as a means of preserving and promoting a robust terrestrial radio broadcast system. In the case of public radio stations, Congress has appropriated substantial funding, enabling grants to more than 700 stations and the conversion of more than 430 stations. Stations converting to HD Radio have made a substantial commitment of time and money because HD Radio promises to revolutionize local broadcast services.”

This is interesting. HD already gets congressional funding, FCC support, and grants to stations. Is HD revolutionizing the audio landscape, or is it draining off dollars? I guess according to NPR, the next hand-out should be that satellite radio pay for the mandated inclusion of HD.

Sirius XM Radio offered up a lengthy filing, noting, First, an HD Radio mandate would be harmful to consumers, car manufacturers, and receiver manufacturers. It would harm consumers by driving up costs for features and services that they may not want and would adversely impact consumer choice in audio entertainment. Moreover, it would add an unnecessary additional economic burden on struggling car manufacturers.”

Ibiquity profers the argument that satellite radio is blocking them from enering the marketplace. In their FCC filing Ibiquity states, “As iBiquity demonstrated in its comments, Sirius XM has a strong incentive and the ability to impair the introduction of HD Radio technology into the marketplace. iBiquity again urges the Commission to expeditiously initiate a proceeding to develop the appropriate rules that will ensure the market works properly and prevents Sirius XM from blocking the rollout of HD
Radio technology.”

Interestingly, this issue was addressed in the merger. Sirius XM Radio do not hamper Ibiquity from entering the market, Ford, BMW and others all offer HD as an option. Adoption of it seems slow, but is that Sirius XM’s issue? Ibiquity can play in the game, but to be a success, you have to have some game. Up until now it simply has not been demonstrated.

In their own recent filing, GM slams the HD argument in one fell swoop stating, “HD is already penetrating the automotive sector without a mandate. Several manufacturers are either currently offering HD or have announced plans to make HD radio standard or optional in future models. Nothing in General Motors’ agreements with Sirius XM inhibits our ability to offer HD radio.”

A substantial group of various disability organizations have come out in hopes of seeing mandated HD inclusion. The cite that the only fair way is equal access. Somehow, I think HD already has equal access. They can develop deals with anyone they want. Perhaps these organizations should be demanding that HD work free market deals with everyone.

The Minority Media and Telecommunications Council offers up an interesting stance. They state, “The Commission should require seamless scan AM/FM and HD Radio capacity in SDARS receivers because, without such a requirement, Sirius XM could use its satellite monopoly in the marketplace, the cost savings generated from the merger, and its relationships with equipment manufacturers and retailers to retard the growth of terrestrial services.”

Is satellite retarding terrestrial growth? impossible, terrestrial radio has 95% of the market! Just ask them. They will tell you! The comments fall on their face when you look at all of the advantages HD radio already has. It is terrestrial that has spent a decade trying to retard the growth of satellite!

In the end, if you boil everything down to it simplest form, it comes down to dollars. This is not about access, consumer good, or anything else. Who is going to foot the bill for HD Radio’s attempt at creating a new market. I say enough taxpayer money has already been spent, and taking money from SDARS is not an answer either.

position – Long Sirius XM