Sirius/XM Merger Sidebar

As lobbying over the conditions of the merger between the Sirius and XM satellite radio networks entered the home stretch, iBiquity Corporation and the National Association of Broadcasters requested that the Federal Communications Commission mandate all future satellite radio receivers to be interoperable with terrestrial digital AM and FM broadcasts.
This was a move by HD Radio‘s proponents to try and get something for nothing. XM and Sirius both subsidized the adoption of satellite radio receivers, especially in vehicles, by making the reception technology freely available and offering special deals to new subscribers (such as free service for a year or more, especially for folks who bought new cars and trucks with a satellite radio receiver as an option). In contrast, iBiquity Corporation wants those who make and market HD radio to pay it a cut from every HD receiver sold – effectively asking auto companies to partially pay the way for HD’s adoption. This is a proposal that nearly all have resisted.
On July 10, just two weeks before the FCC cast all its votes on the Sirius-XM merger, General Motors and Toyota filed brief comments addressing the question of interoperability between digital satellite and terrestrial radio technologies. GM and Toyota both strongly opposed the notion of making interoperability a condition of the satellite radio merger. Not because of any problem with the satellite companies themselves, but due to misgivings about HD Radio.
Not only is “HD…already penetrating the automotive sector without a mandate” and “[n]othing in our companies’ respective agreements with [satellite radio broadcasters] inhibits our ability to offer HD radio,” GM and Toyota further worried that “once mandated, the holders of the intellectual property for HD would have no incentive to be fully responsive to the demands of the marketplace.”
In sum: two of the world’s largest vehicle manufacturers are leery of the wholly proprietary nature of HD Radio and believe that its success or failure should be based on listener adoption, not mandated inclusion in the dashboard. It is a very strong message of no-confidence in the HD technology; perhaps the strongest articulated by any vehicle manufacturer to date. The FCC’s final decision on the merger did not make satellite and HD interoperability a condition of the deal – this question will be taken up in a separate, future inquiry.