Why an XM / Sirius Merger Doesn't Even Matter
The proposed merger between Sirius and XM satellite radio probably won't help the ailing companies. Not everybody is happy about the idea of a merger. Last time I blogged on this topic I looked at how the National Association of Broadcasters were calling the merger a form of government handouts.
Just yesterday XM and Sirius have been pitching the merger to the House Energy and Commerce Committee promising the price of the combined services would drop. But that price drop is for the cost of both services combined which is about $25 bucks a month. I don't think most people who subscribe to one or the other really care to have both. So, effectively this looks like a price increase to me.
Current subscribers aren't going to like the idea of a price hike. But if you like your satellite radio and want to keep it – a merger is likely the only way.
The trouble satellite radio will have pitching a merger is that they can't just consider satellite radio's competition as mobile entertainment today. They have to consider satellite radio's competition going into the future and there are some major technologies emerging that make satellite radio look pretty weak by comparison. The cost of wireless digital bandwidth is dropping – how long before Internet radio is streamed to mobile phones? Car stereos have Bluetooth technology so they can stream music from your buddy's cell phone. City wide wi-fi hotspots will continue to grow, soon most people will almost never leave an area where free wi-fi Internet access is there for the taking. The next step is for your car stereos to automatically obtain an IP when it detects a wi-fi hotspot and sync with your favorite Internet radio station's playlists. This combined with a monthly music service will make this setup perfectly legal with the FCC and RIAA.
Make no mistake – this is satellite radio's competition and it's a jungle out there! Even if the companies do merge – it's probably not even going to matter. Who wants a one way data stream from space when you have access to a free two way data stream?