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Rival US Companies to Provide Digital Satellite Radio Service - 2001-12-24

Two rival companies in the United States have invested hundreds of millions of dollars in what they say will be the next revolution in broadcasting - satellite radio.

For decades, radio broadcasting in the United States was based on essentially the same model. Radio stations depended on advertising, produced programs and people listened - at no charge. At home, in their cars, at the beach - radio has been "free", at least on the surface.

Having enjoyed free service for so long, why would people be willing to pay for that same service? The answer, according to the two U.S. giants of satellite radio, comes down to three things - clarity, choice, and a general absence of commercialism.

The sound of XM Radio is the first company to formally launch satellite radio service in the United States. Charles Robbins is the company's head of corporate communication. He says XM is doing for radio what cable and satellites have done for television. "What we are offering," he says, "is 100 living, breathing radio stations with point of view, attitude, excitement and depth. And we're confident that the consumer will find the services as compelling as we do."

From two powerful satellites in geostationary orbit, XM transmits more than 100 channels of radio, with the clarity of a compact disc player. The cost is about $10 dollars a month. Rock and roll, country, jazz, reggae, soul, comedy, ethnic are all represented.

There are also channels for news, sports, talk, technology, children's programming - even a special channel dedicated to car racing fans.

XM Radio occupies a large futuristic facility filled with 82 studios, cutting-edge fiber optic technology, computers, and one of the largest digital audio systems ever built. But although XM got a head start, another company is close behind.

With its three orbiting satellites, New York-based Sirius is convinced that it can compete with XM. Joseph Clayton, a former Internet and telecommunications industry executive, is CEO of Sirius. "The variety and selection we believe is a competitive advantage," he says. "Now that can be debated, whether it's XM or Sirius, but we feel we have a pretty compelling programming lineup."

Sirius will charge $13 dollars a month for its 100 or so channels, of which 60 will be commercial free, with another 40 devoted to sports, talk, comedy and children's programming. Like XM, Sirius has agreements with major automobile manufacturers to offer satellite radios in their cars.

Can two satellite radio giants compete for the same potential audience, and be profitable doing it? Broadcast industry analysts say time will tell. The signs so far are good, with listener reaction running almost universally positive.

Satellite radio is especially attractive for people who spend a lot of time or travel long distances in cars. Conventional broadcast stations are subject to fading and distance limitations. Satellite radio signals can be heard clearly coast to coast. Both companies are planning to build a network of "repeaters", or relay transmitters, to fill in the gaps.

Industry analysts say it will be some time before satellite radio is profitable or poses a threat to the revenue of commercial radio. However, some broadcasting companies and individual radio stations have decided not to run advertisements for XM or Sirius.

Joe Bilotta is chief operating officer for Buckley Broadcasting Corporation, which owns 18 radio stations in seven U.S. broadcasting markets. "People like us, in our company, are viewing it as direct competition. That's how we feel," he says. "It is a direct competitor and as such we will not advertise it on our company, on our 18 radio stations or on our syndicated radio network."

Sirius Radio is scheduled to formally launch its new service on February 14. Meanwhile, XM Radio, with its two satellites nicknamed somewhat appropriately "rock" and "roll", says subscriptions to its service are already exceeding expectations.