A recent article in the Associated Press has brought the debate about device interoperability to the forefront of the discussion over the Justice Department’s merger approval.
Interoperable radios, devices that can receive both satellite radio services, isn’t a new point of deliberation in the satrad-circles. During the summer of last year, Michael Hartleib that these interoperable (or “dual mode”) radios are already available on the market. His suspicions were that the additional functionality of interoperable operation could be turned on via an over-the-air firmware update. These uncertainties have never been confirmed by either Sirius or XM.
But interoperability, or lack thereof, was one of the many factors that the DOJ cited as part of not choosing to block the merger.
The DOJ said “there has never been significant competition” between the
companies for customers who already subscribed to one of the services.
While Sirius and XM “made some efforts” to develop an interoperable
radio, it said that “no such inter-operable radio is on the market and that
such a radio likely would not be introduced in the near term.”
“The parties did in fact develop an inter-operable radio and my
understanding is they have one,” Thomas O. Barnett, assistant attorney general for antitrust at the Justice Department, told the AP. “But there’s a
difference between developing something and market acceptance of
something.”
“We’ve developed it, we’ve lived up to our license. There’s not a question,” Mel Karmazin told a House subcommittee. Karmazin
The companies argue that there is nothing in the 1997 FCC license that says such a radio has to be subsidized and brought to market.
“The
reason we will not subsidize it today (is) because it’s possible that
Sirius would subsidize an inter-operable radio which would result in XM
getting a subscription,” Karmazin told Rep. Ed Markey, R-Mass.,
chairman of the House Subcommittee on Telecommunications and Internet.
“It doesn’t make any sense for us to subsidize a radio where we don’t
get a subscription.”
Whether or not interoperable radios are already on the market, as Hartleib contests is the case, is difficult to truly prove for certain. And I’m not sure that it even matters at this point. The DOJ has ruled. And the agency cited the lack of interoperability as only a part of its investigation.
“We focused on what was actually happening in the marketplace and what
was likely to happen in the marketplace going forward,” said Barnett. So whether or not they can receive both services isn’t material, it’s whether they do.
The responsibility now lies at the steps of the Federal Communications Commission. And on November 2nd, the FCC sent extensive requests for documents to both Sirius and XM, including a request for them to “provide a description of
all efforts to develop and commercialize inter-operable satellite radio
receivers and any difficulties in such development and
commercialization.”
Perhaps we will find out the results of those requests when the Commission makes its decision… whenever that may be.
[AP]
Thanks Chris!
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