Sirius and XM said that to produce interoperable radios that would have allowed a single radio to receive both services would have cost a consumer $700 without a subsidy and were therefore never brought to market.
The information was revealed in a filing with the Federal Communications Commission (FCC) in which Sirius and XM attorneys countered recent arguments presented by a coalition related to the National Association of Broadcasters (NAB).
The coalition argued that Sirius and XM violated FCC requirements by failing in the past to market interoperable radios. Sirius and XM countered that the FCC only required the companies to design interoperable radios.
Sirius and XM said that through a Joint Development Agreement, they also built prototypes of interoperable radios. Their attorneys stated in the filing, “The companies have not taken the ultimate step of bringing interoperable radios to market — a step that was not mandated by the commission — because it would not make economic sense for them to do so, since they ordinarily subsidize the production of their radios and would not be assured of recouping these subsidies for interoperable radios through subscription fees.” The companies noted current satellite radios carry retail prices of between $29 and $170.
The letter raised some concerns on capital hill by Senator Sam Brownback of the Subcommittee on Antitrust, Competition Policy and Consumer Rights because the public version of the FCC letter had large portions blackened out, or redacted. The Senator asked that members of the Judiciary Committee receive unredacted versions so the committee “could investigate fully” the documents “before the FCC reaches its final decision on the proposed merger of Sirius and XM.”
The merger has been awaiting federal approval for approximately 16 months with the FCC yet to decide its fate. FCC chairman Kevin Martin stated recently he hopes the committee will reach a decision by the end of this month.