Consumer Group Demands FCC Hearings on Satcaster Merger

by Erik Sass, May 30, 2008, 7:30 AM

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Opponents of the proposed merger between Sirius and XM Satellite Radio are coming out of the woodwork, with the creation of a new consumer advocacy group whose sole purpose appears to be stopping the merger from happening.

The Consumer Coalition for Competition in Satellite Radio, composed mostly of XM and Sirius subscribers as well as "volunteers," is attacking the merger based on confidential documents it says were filed by Sirius with the Federal Communications Commission--on April 10th of this year.

Although heavily redacted, the public version of the letter from C3SR to the FCC alludes to highly confidential documents from Sirius that "cast the proposed merger in a very negative light, and call into question the truthfulness and candor of both Sirius and XM with respect to their dealings with the commission as licensees and during this proceeding."

Specifically, the letter alleges that the two satcasters have failed to produce an inter-operable receiver, as required by their respective FCC licenses. According to C3SR, this failure has also been noted by the Consumer Federation of America, the Consumers Union and Free Press.

"In sum, full and fair marketplace competition, as originally intended by the Commission, has never occurred because of the conduct of Sirius and XM," the letter says, implying that "the proposed merger is contrary to the public interest because it furthers an illegal conspiracy to restrain trade."

The letter petitions the FCC to open an investigation and hearings about the merger--with the clear goal of stopping it. In a footnote, C3SR also argues that the Department of Justice's approval of the merger, granted in March, was based on faulty reasoning. The DOJ's Antitrust Division ruled that the merger would not be an anti-competitive move because currently consumers must incur high costs for switching from one service to the other; in other words, there is no real direct competition between the satcasters.

C3SR seems to argue that this was precisely the intent of the satcasters in neglecting to produce an interoperable receiver, which would make it much easier for consumers to switch from one service to the other.

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