The Justice Department has approved the merger of XM and Sirius satellite radio (story). That leaves the Federal Communications Commission as the last line of defense for consumers. The main argument that the Justice Department used to grant these folks a monopoly on satellite radio is that it isn’t a monopoly on music. A person could use an MP3 player, listen to standard AM and FM stations, or hire a violinist to sit in the back seat of his or her car.
What has been lost in the press coverage of this event is that XM and Sirius are the only companies equipped to offer nationwide data broadcast services. Each 64 kbps data stream could be used for a music channel or to broadcast aviation weather, traffic jam information, or any other data important enough for people to pay. These data channels are more lucrative than the music channels. Aviation weather costs $50 per month for one channel, none of which need be paid out as a royalty because the information is all provided free by the federal government. Traffic information is $10 per month for one channel. Music costs about $13 per month for 100 channels.
Will there be any hope of competition once the merger goes through? The mobile phone networks don’t provide adequate coverage for many uses, such as aviation. The cost of launching new satellites would be prohibitive and any new entrant to the market would have to content with the fact that XM/Sirius has exclusive agreements with popular sources such as Howard Stern, NPR, and various sports leagues. Our government, saddled with a $3 trillion bill for making Iraq safe for Iraqis, seems unlikely to attempt any kind of public wireless Internet.
I predict that the cost to consumers of this merger will be at least a doubling of the long-term rates paid for data provided via satellite. That will discourage a lot of people from signing up for traffic information, which will lead to less efficient use of our road network, thus increasing our consumption of oil from countries that hate us, thus increasing our military expenditures to keep those countries under our thumb. CO2 emissions and other forms of pollution will also be increased. Work time will be lost as Americans are stuck in traffic, thus reducing our GDP and our competitiveness with more efficient countries. In the air, the high price of weather already keeps a lot of pilots from subscribing; the $600/month is nothing for jet owners, but is about equal to the cost of insurance or maintenance on an old Cessna. There will be some additional deaths each year due to people flying into bad weather that they could have learned about.
[These are also sad times for audiophiles. With XM and Sirius competing, there was some hope that eventually one would offer improved audio quality on at least some stations. With the two combined, it will be “any quality you want, as long as it is the muddy sound from 64 kbps and the CODEC that we designed in the late 1990s” (compare this to the 128 kbps of a standard MP3 stream or 192 kbps for a somewhat better MP3).]
If we must give a company a monopoly on satellite audio, it is a shame that the Federales didn’t say “You can have your radio monopoly, but you have to carry at cost any data that touches on public safety or environmental quality.”