HD Radio Inclusion Debate Heats Up

The merger between Sirius and XM has happened, but the issue was not totally resolved with the FCC when the decision to allow the companies to merge was announced. With the announcement of the approval of the license transfer, the FCC took it upon itself to investigate the possibility that HD radio technology should be included in 100% of satellite radios manufactured.

The file on the issue has had a spattering of comments from manufacturers, Sirius XM (SIRI), Ibiquity and others, but the debate has been rather slow…until now. Over the past couple of days, the HD issue has begun to heat up.

The first salvos came early on, and there was little discussion and debate, but rather various companies and organizations offering up an opinion, or jockeying for position. Comments from Ford (F), GM, and Toyota (TM) that oppose the requirement were strong statements, but it is a recent comment by the Association of International Automobile Manufacturers (AIAM) that perhaps is the most damning yet of forced HD inclusion. AIAM includes Aston Martin, Ferrari, Honda (HMC), Hyundai (HYMLF.PK), Isuzu (ISUZY.PK), Kia, Maserati, Mitsubishi (MMTOF.PK), Nissan (NSANY), Peugeot (PEUGF.PK), Renault, Subaru (SBUOF.PK), Suzuki (SZKMF.PK), and Toyota. The organization offered up very strong arguments such as the fact that the forced inclusion would add costs to cars for a product which as yet is unproven as a desire from consumers.

Other interesting filings include:

Continental, a parts supplier to the auto industry, calls HD inclusion in the FCC filing the “Anti A-La-Carte” proposal and warns that forced integration is a slippery slope that would propel Ibiquity to instant market parity through regulation instead of market success.

The Coalition of Organizations for Accessible Technology (COAT), offers support for HD Inclusion. Their argument states, ” Like any other consumer group, many of the over 50 million people with disabilities in the United States listen to radio for news, information, music and other entertainment. They listen to over-the-air broadcasts, they pay for radio programming in their cars, and they want the benefits of any new radio technologies, particularly if these offer a means of accessibility.”

While I have compassion for people with disabilities, I would stop short of saying that mandated HD inclusion into SDARS receivers helps those that are disabled in any meaningful way at this point. COAT does not address costs associated with the issue, but rather relies on a “the more the better” type of mentality.

It would not be a debate without comments from the National Association of Broadcasters (NAB). As you can imagine, the NAB wants the inclusion to happen. They still maintain their “monopoly” stance, and justify the forced inclusion by stating that Sirius XM are being some sort of “bully” in wanting to see HD take the journey of getting acceptance in much the same way Sirius and XM did. The NAB states, ” Unsurprisingly, Sirius XM opposes any Commission action that would enable consumers to more conveniently access competing technologies with their monopoly satellite radio services.”

I would submit that the issue is less about convenience to the consumer, and more about the dollars behind the inclusion. Sirius XM have stated as part of the merger that they would allow any manufacturer to include any capability in receivers. Thus, HD inclusion is allowed to happen as a function of demand.

NPR, an opponent of the merger, and proponent of HD inclusion, gives HD radio a lot of credit, citing, “The Commission has pledged its support for the HD Radio technology as a means of preserving and promoting a robust terrestrial radio broadcast system. In the case of public radio stations, Congress has appropriated substantial funding, enabling grants to more than 700 stations and the conversion of more than 430 stations. Stations converting to HD Radio have made a substantial commitment of time and money because HD Radio promises to revolutionize local broadcast services.”

This is interesting. HD already gets congressional funding, FCC support, and grants to stations. Is HD revolutionizing the audio landscape, or is it draining off dollars? I guess according to NPR, the next hand-out should be that satellite radio pay for the mandated inclusion of HD.

Sirius XM Radio offered up a lengthy filing, noting first that an HD Radio mandate would be harmful to consumers, car manufacturers, and receiver manufacturers. It would harm consumers by driving up costs for features and services that they may not want and would adversely impact consumer choice in audio entertainment. Moreover, it would add an unnecessary additional economic burden on struggling car manufacturers.

Ibiquity profers the argument that satellite radio is blocking them from entering the marketplace. In their FCC filing Ibiquity states, “As iBiquity demonstrated in its comments, Sirius XM has a strong incentive and the ability to impair the introduction of HD Radio technology into the marketplace. iBiquity again urges the Commission to expeditiously initiate a proceeding to develop the appropriate rules that will ensure the market works properly and prevents Sirius XM from blocking the rollout of HD Radio technology.”

Interestingly, this issue was addressed in the merger. Sirius XM Radio does not hamper Ibiquity from entering the market; Ford, BMW and others all offer HD as an option. Adoption of it seems slow, but is that Sirius XM’s issue? Ibiquity can play in the game, but to be a success, you have to have some game. Up until now it simply has not been demonstrated.

In their own recent filing, GM slams the HD argument in one fell swoop, stating, “HD is already penetrating the automotive sector without a mandate. Several manufacturers are either currently offering HD or have announced plans to make HD radio standard or optional in future models. Nothing in General Motors’ agreements with Sirius XM inhibits our ability to offer HD radio.”

A substantial group of various disability organizations have come out in hopes of seeing mandated HD inclusion. They cite that the only fair way is equal access. Somehow, I think HD already has equal access. They can develop deals with anyone they want. Perhaps these organizations should be demanding that HD work free market deals with everyone.

The Minority Media and Telecommunications Council offers up an interesting stance. They state, “The Commission should require seamless scan AM/FM and HD Radio capacity in SDARS receivers because, without such a requirement, Sirius XM could use its satellite monopoly in the marketplace, the cost savings generated from the merger, and its relationships with equipment manufacturers and retailers to retard the growth of terrestrial services.”

Is satellite retarding terrestrial growth? Impossible, terrestrial radio has 95% of the market! Just ask them. They will tell you! The comments fall on their face when you look at all of the advantages HD radio already has. It is terrestrial that has spent a decade trying to retard the growth of satellite!

In the end, if you boil everything down to it simplest form, it comes down to dollars. This is not about access, consumer good, or anything else. Who is going to foot the bill for HD Radio’s attempt at creating a new market? I say enough taxpayer money has already been spent, and taking money from SDARS is not an answer either.

Disclosure: Long Sirius XM

Comments

[ctman45:]

If the logic to force all satellite radios to include HD technology is accepted then couldn't the same logic be used to force all radios sold in this country to include satellite radio capability?

2008 Dec 11 08:33 AM

[Sherwyn:]

Forcing the automobile manufacturers to offer HD receivers is an example of one of the reasons behind the collapse of the automobile industry. The Federally mandated "features" that must be included in every automobile sold in this country (foreign manufactured, as well) has driven the price up to where it is difficult to find even an economy vehicle for less than $20,000. Sure, high labor costs are another significant factor, but whether you call it safety features or convenience features, that is why a car costs as much now as a house did 30-years ago.

2008 Dec 11 12:32 PM

[sl62:]

Good article Tyler. This issue is a future mess...and personally I doubt there is a friendly solution here. I think it wil go down to one waiting for the other to "cry uncle" for lack of a better idiom, or be forced through law to capitualte in some manner. Good luck with this one. Airwave TV is essentially merging with "cable" as of Feb. where a "box" will then be required to receive any signal. Does radio need to do the same? Not as long as Mel is in the picture, that I can reasonably say for certain lol.

Btw...SIRI now officially takes the prize for most embattled company of all time. I would use the word unlucky but I just can't bring mysef to do it. SIRI is just tied to everything and anything that is negatve! This latest congressional drama is just priceless. Even if they dole out the 14B now, there will be a whole other mess next year going into a March 31 (or now the f'ing Senate might demand March 15) deadline for consolidation--which of course will also affect SIRI. With the risks involved regarding economic fallout from bankruptcy, it's scary these clowns are willing to roll the dice. We saw what Lehman did...a congressional hand-picked witness testified to cataclysmic ramifications to BK, and yet Shelby and his a-hole buddies are too locked on their own jocks to acknowledge what might be. Why? Because they won't be affected and they lost the Civil War and are probably still pissed about it. lol. Even with a might be, you can't allow BK at this time. Next year at some point fine. Not now. They're going to back the warranties? What The F%ck. As that is part of their thesis and rationale, it shows right there how lost and out of touch these little boys are. I really do hate these clowns.

2008 Dec 11 12:51 PM

[BerkeleyBob:]

A congressional study recently released had very harsh things to say about the FCC Chair, who is unlikely to survive the regime change. I have not heard HD radio, but think the sound quality delivered by Sirius/XM is good in the difficult environment of a car, close to CD quality. If the NAB is for it, I am against on general principles and their past track record. Although I usually listen at home to college radio or NPR, I might extend my Sirius subscription to home use so long as I can get a high quality signal without commercials.

2008 Dec 11 01:12 PM

[cos1000:]

Here is an interesting update reported by Orbicast.com:

Senator Jay Rockefeller (D-WV) and Representative Henry Waxman (D-CA) today called on FCC Chairman Kevin Martin to put the agency's actions on hold unless they are urgent or required by law.

Rockefeller's and Waxman's committees both have jurisdiction over the FCC.
The two lawmakers said the FCC should focus on completing the broadcast digital TV transition next February, but not on unrelated matters - particularly any controversial issues that the Obama administration will want to review.

The agency would have to halt consideration of most items before it, and that very well could include items that would be covered during the FCC's December 18 meeting.

2008 Dec 13 05:31 PM

[cos1000:]

sorry that's Orbitcast.com

2008 Dec 13 05:32 PM

[killerkaul:]

Cos................ too bad we can't just send the carpetbaggers packing now! .. killer.

2008 Dec 17 06:35 PM