• by Erik Sass  @eriksass1, July 1, 2008

Three Democratic Senators wrote a letter to Kevin Martin, the chairman of the Federal Communications Commission, listing conditions that should be met if Sirius and XM Satellite Radio are allowed to merge. Senators John Kerry (D-MA), Claire McCaskill (D-MO) and Ben Cardin (D-MD) said they were concerned the merger would eliminate competition in the satellite radio marketplace, adding that various conditions already proposed for the merger are insufficient. They argued that more stringent conditions are necessary to mitigate the ill effects.

Chiefly, the senators took issue with the proposal to lease 12 channels--or about 4% of the combined companies' capacity--to minority programmers, and another 12 channels to noncommercial and informational programming. They said the total 8% is insufficient to "ensure a viable competitor," demanding that the companies lease at least 20% of their capacity and as much as 50%. This condition was proposed separately by four state attorneys general in a letter to Martin earlier this year.

The senators also demanded that satellite radio receivers be required to include HD digital radio receivers as well, casting this condition as "an essential check against the merged entity using its monopoly power to stifle a promising new free, over-the-air technology." Here the legislators echoed earlier demands from the HD Digital Radio Alliance, an industry consortium representing terrestrial broadcasters, and iBiquity Digital, the company that controls HD radio technology.

In late May, Pioneer North America sent a letter to the FCC arguing against this condition, warning that forcing manufacturers to include HD tech would "interfere with the useful and healthy free market mechanisms extant in radio electronics purchases" and result in a host of technical difficulties, including "decreasing AM/FM tuning performance."

Also in May, a compromise position was suggested by Representatives John Dingell (D.-Mich) and Ed Markey (D-Mass.), who proposed that satellite radio manufacturers should be allowed--but not required--to include other audio options, like HD receivers, as well as iPod ports and Internet hookups.

Finally, the senators said the FCC should hold the two satcasters to their promise to make interoperable radio receivers that can receive signals from both services--as they originally agreed to do in 1997 when the FCC issued their broadcast licenses. They demanded open access to the technology, so the satcasters will not have exclusive control of hardware capabilities in future.