The Threat of Internet Radio Competition to Sirius XM Just Vanished

| About: Sirius XM (SIRI)

Bad news Howard. Bad, bad news. You might want to sign that contract with Sirius XM (NASDAQ:SIRI) right away, because thanks to this week's election results, Internet Radio has been dealt a mighty blow.

For years I have written that Internet Radio posed little threat to Satellite Radio, for a multitude of reasons. Most recently, I pointed out that Internet Radio services compete more with iPods and CDs than they do with even terrestrial radio, due to its music only content offerings.

My main argument however, was that the costs of data streaming would exclude much of the market potential of Internet Radio.

The F.C.C. had sought to force Internet Service Providers to stream content at any cost, for free, to all of the world. This was easily shot down by the U.S. Court of Appeals earlier in the year. The election results however, have all but ended the idea. Internet Radio as a viable alternative to Satellite Radio, is dead.

A report from CNNMoney's David Goldman, indicates that ALL 95 House and Senate candidates who pledged to support Net Neutrality, LOST! With no congressional support, and no judicial support, the F.C.C. is now left to try to overstep its authority on its own, and hope it sticks. Already, services such as Verizon (NYSE:VZ) and AT&T (NYSE:T) can cut off a streaming application if it determines the application to be using too much bandwidth, and can charge additional fees for popular music streaming applications.

The Federal Communications Commission tried to implement Net neutrality rules but got smacked down in April by a court ruling saying it did not have the authority to do so. As a result, it is preparing a proposal asking Congress to give it new authority to regulate broadband Internet service.

Mr. Goldman asks whether this is the final nail in the coffin for net neutrality. It may just be the final nail in the coffin for Internet Radio's future as well. These self proclaimed "free offerings" will be forced into charging subscription fees. When considering the subscription fees, and the data fees, there is little hope that this market can ever compete with the content provided by Sirius XM Radio.

The widespread Democratic losses made an already uphill battle even tougher. More than a dozen incumbent congressmen who had voted for a similar Net neutrality bill in 2006 were voted out of office on Tuesday, most notably Rep. Rick Boucher, D-Va., a 28-year House veteran.

I can hear the bell tolling now....but it's not for Sirius XM.

Disclosure: Author long SIRI