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Grab a pen and a piece of paper, and be prepared to say "wow!"

Just days ago, I speculated that Sirius XM Radio (NASDAQ:SIRI) would be shifting towards an Internet based service, but delivered through its own satellites as part of what will be SATRAD 2.0. You may also want to note that it had been reported previously that the next generation iPhone will include Satellite Radio chip-sets. The picture is getting much clearer now.

This week, it was reported that AT&T (NYSE:T) may be interested in acquiring Dish Network (NASDAQ:DISH), with a specific interest in acquiring the bandwidth Dish recently acquired through its purchase of DBSD. I reasoned that Charles Ergen had made the purchase with the intent of offering a satellite radio type of service, given his previously reported interest in owning Sirius XM. I just received a patent from our top technology researcher, Rod Gunsauley, for a Verizon patent issued approximately thirty days ago. This patent, I believe, clarifies the blurry picture that has been developing for some time.

Cell carriers are faced with a crisis of sorts, which stems from bandwidth hogging applications such as internet radio. Auto manufacturers are now including these types of offerings in their vehicles. The strain on bandwidth can only increase. If a satellite service, however, could deliver audio entertainment options to a cell phone through the use of its own satellites, the cell carriers could free up more of their existing bandwidth. Apple's (NASDAQ:AAPL) iPhone patent gave us a first glimpse of this idea. This new Verizon (NYSE:VZ) patent, conversely, proves that the speculation of what Sirius XM's SATRAD 2.0 offers is worthy of excitement.

Imagine a scenario in which every new Verizon phone is preloaded with a Sirius XM application that delivers satellite radio in an easy to use internet-based application, as this patent suggests. This would seem logical given the recent announcement that Teleca had completed a droid based platform, for Sirius XM:

"In speaking with Teleca’s CTO, Andrew Till, he tells us this new solution that Teleca has developed for Sirius XM will “Leverage the Android surface architecture and frameworks” and it will “enable Sirius XM to focus future investments on innovation rather than platform maintenance”" - The Droid Guy

And now, the "wow!" factor. The following abstract appears in a Verizon patent dated January 6, 2011:

SYSTEM FOR AND METHOD OF RECEIVING INTERNET RADIO BROADCAST VIA SATELLITE RADIO

Abstract

  • A system for and method of receiving internet radio broadcast via satellite radio is presented. The system and method allow internet radio to be delivered to consumers on a mobile electronic device. Internet radio can be individually customized to deliver certain types of content and can also deliver on-demand content. The system and method therefore provides for the delivery of customizable on-demand content to a consumer's mobile device with the stable and wide-ranging connectivity of satellite radio.

You read that right. "With the stable and wide-ranging connectivity of satellite radio." It now appears that Verizon is acknowledging that traditional internet radio offerings are subject to dropouts, which was the ONLY response offered by Sirius XM when asked about the potential threat that internet radio may bring.

I would like to highlight the following patent excerpts:

BACKGROUND INFORMATION

[0001] Conventional satellite radio services provide access to many different stations or channels, but are not able to deliver on-demand content to the customer. Internet radio, on the other hand, is able to deliver on-demand content to customers, but is unable to provide stable connectivity to mobile customers.
[0008] Satellite radio has gained in popularity because it is able to provide subscribers with more stations than conventional radio, and those stations are not limited geographically like conventional radio stations. In other words, with satellite radio, there is little to no risk of losing a good station as you drive along a highway.

DETAILED DESCRIPTION OF PREFERRED EMBODIMENTS

[0009] Internet radio has also gained in popularity. This is at least in part due to the capability of many internet radio service providers to provide such features as on-demand content, playlist creation, and customizable channels.

[0010] Satellite radio currently does not provide on-demand and/or customizable content. Internet radio currently does not provide connectivity to the mobile customer in a stable fashion. Exemplary systems and methods of the present invention provide a user with the ability to customize audio content as with internet radio, and have the customized content broadcast by satellite transmission. As such, users can have access to on-demand content, for example, on a mobile device (e.g., a cellular phone, or PDA) so long as the mobile device is equipped with a satellite receiver.

Clearly, the rumors of Sirius XM's demise at the hand of internet radio were premature.

Disclosure: I am long SIRI.

Source: Verizon Patent Proves Internet Radio Is No Threat to Sirius XM