Perhaps NiceMac, the creators of the first unofficial iPhone (NASDAQ:AAPL) application for Sirius XM Radio (NASDAQ:SIRI), was too early with its iPhone Application for Sirius XM Radio ambitions. The StarPlayr application created by NiceMac was recently shut down because of violation of Sirius XM Radio terms of service issues. An argument can be made that a third party application to stream Sirius XM Radio on the iPhone should be covered under the FCC’s mandate for “Open Device Access”. The problem with the FCC mandate for “Open Device Access” for NiceMac is that the mandate does not take effect until 1 year after the merger between Sirius and XM satellite radio. The FCC officially approved the merger between Sirius Satellite Radio and XM Satellite Radio on July 29, 2008, this would mean that Sirius XM Radio would need to provide an open device standard by the end of July of this year in order to be in compliance with the FCC merger concession.
Based on documentation provided to the FCC by Sirius XM Radio’s own legal counsel for the merger:
The merged company will permit any device manufacturer to develop equipment that can deliver the company’s satellite radio service. Device manufacturers will also be permitted to incorporate in satellite radio receivers any other technology that would not result in harmful interference with the merged company's network, including hybrid digital (HD) radio technology, iPod ports, internet connectivity, or other technology. This principle of openness will serve to promote competition, protect consumers, and spur technological innovation. Within one year following the consummation of the merger, the combined company shall offer for license, on commercially reasonable and non-discriminatory terms, the intellectual property it owns and controls of the basic functionality of satellite radios that is necessary to independently design, develop and have manufactured satellite radios (other than chip set technology, which technology includes its encryption and conditional access keys) to any bona fide third party that wishes to design, develop, have manufactured and distribute subscriber equipment compatible with the Sirius system, the XM system, or both.
Ok, the next question that should be asked is, does the FCC “Open Device Access” only apply to satellite radio hardware devices or does it also apply to the satellite radio company’s internet stream? In theory the “Open Device Access” mandate by the FCC should cover both hardware devices and internet radio stream. The FCC however is extremely bad at defining its own mandates as exhibited by the FCC’s continuous push back of the 4 percent minority ownership merger concession.
Additionally the following text can be found in the documentation provided to the FCC by Sirius XM Radio’s own legal counsel:
Further, the merged company will not execute any agreement or take any other action that would bar, or have the effect of barring, a car manufacturer or other third party from including non-interfering HD radio chips, iPod compatibility, or other audio technology in an automobile or audio device. Each licensee shall be responsible for, and bear all costs associated with, the design, development, manufacturing, including parts procurement, logistics, warranty, sales, marketing, and distribution of such satellite radios.
The above statement could technically include the iPhone because of the terminology “or other audio” and “or audio device”. The iPhone can in theory be considered an “audio device”. It would be advantageous for Sirius XM Radio to create an Open API for its internet stream for third party developers to utilize. This would make Sirius XM Radio’s service ubiquitous as Sirius XM Radio’s CEO Mel Karmazin so eloquently described some of Sirius XM Radio’s current initiatives on this week's Q4 2008 conference call. Sirius XM Radio should only care that users of the internet radio stream are paid subscribers and that the third party developer is taking the appropriate steps to protect the company's subscribers' usernames and passwords.
It seems like the folks at NiceMac were too early with their ambition to produce the first satellite radio application for the iPhone. NiceMac should put its Phone code on hold in hopes that an official Open API Internet Stream for Sirius XM Radio is produced by Sirius XM Radio. If an official API is eventually released the folks at NiceMac with a little rework will be in a great position to continue making a great internet radio application for Sirius XM Radio content.
Disclosure: Long AAPL, SIRI.