• by Erik Sass , August 27, 2008

Reviving an issue that earlier appeared to be settled, the Federal Communications Commission may still require the merged Sirius-XM satellite radio broadcaster to include hardware that makes their radios compatible with HD terrestrial radio broadcasts. In a Notice of Inquiry, the FCC is inviting comment from the public and companies that may be affected, including manufacturers of satellite radios.

The news comes just a few weeks after the FCC voted along party lines to allow the satellite radio merger to proceed. To get approval, Sirius and XM had to agree to a number of conditions, including leasing 8% of the satellite spectrum to minority and public broadcasters and a three-year price cap on subscriptions. The 3-to-2 FCC vote made no mention of the HD radio requirement, which had been discussed but not included in the list of conditions presented to the satellite radio broadcasters.

Shortly before the merger was approved, Senators John Kerry (D-MA), Claire McCaskill (D-MO) and Ben Cardin (D-MD) asked that satellite radio receivers also be required to include HD digital radio receivers, 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.

During the final weeks before the vote, Jonathan Adelstein--one of two Democratic FCC commissioners--said that he would vote to approve the merger if new satellite receivers with this condition were met, along with calls to lease a larger part of the satellite spectrum and a longer price cap. However, the broadcasters refused these more stringent conditions. Washington insiders added that Adelstein's offer to vote in favor had been mere political posturing.

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 such as HD receivers, as well as iPod ports and Internet hookups.

Also in 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."