[Random-bits] KEI Comments on the XM/Sirius Merger

[James Love]

http://www.keionline.org/misc-docs/kei-reply-sirius-xm-fcc.pdf

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of:

Applications for Consent to the Transfer of Control of Licenses
XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite =20
Radio Inc., Transferee

MB Docket No. 07-57

To: The Commission
Date: July 24, 2007

Re:  KEI Comments on the XM/Sirius Merger

Knowledge Ecology International (KEI) is a non-profit public interest =20=

organization with offices in Washington, DC, London and Geneva.  KEI =20
was created in 2006 to support the work earlier carried out by the =20
Consumer Project on Technology (CPTech), an organization that has in =20
the past participated in FCC discussions on media concentration and =20
telecommunications regulation, including mergers on direct broadcast =20
satellite services and the interoperability of information services.  =20=

Information about KEI is available on the Internet at http://=20
www.keionline.org.

KEI opposes the proposed merger of XM Satellite Radio and Sirius =20
Satellite Radio.

We generally concur with the views set out by Common Cause, Consumer =20
Federation of America, Consumers Union and Free Press, in their July =20
9, 2007 comments, including their conclusion that:

<blockquote>This is a merger to monopoly in a distinct product market =20=

that should not be allowed. Moreover, the merger does such harm to =20
the competitive fabric of the industry that there can be no pretense =20
that merger conditions could somehow repair the damage. Any offer of =20
short-term price protection for consumers will not compensate for =20
long term pricing abuse, the loss of choice among competitors, or the =20=

elimination of competition as the driver of program development and =20
service innovation.</blockquote>

We also concur with the July 9, 2007 submission of the Prometheus =20
Radio Project, U.S. Public Interest Research Group and the Media =20
Access Project, including their conclusion that the merger would be =20
contrary to the public interest, and that allowing for a monopoly =20
provider for satellite radio would lead to greater media =20
consolidation, harm underserved and unserved communities and content =20
providers.

Like many other parties that represent the views and interests of the =20=

public and independent content providers, we agree that the satellite =20=

radio industry is a distinct market, and that the public interest is =20
not served by the creation of a monopoly.

Our comments will elaborate on the importance of the interoperability =20=

of devices that receive satellite radio broadcasts, and unbundling of =20=

content.

 =46rom the point of view of the public, there is potentially a large =20=

benefit from having the ability to use the same device to receive =20
content from the XM and Sirius radio services, as well as a wider =20
range of choices in terms of the bundles of channels subscriptions =20
that one can purchase.

One of the arguments in favor of the merger is that the merger would =20
allow the public to more easily obtain access to content now =20
delivered by the two separate broadcasters.  However, since the =20
creation of a monopoly has numerous negative impacts, including those =20=

outlined by the parties mentioned above, the public interest is =20
better served by rejecting the monopoly, and taking steps to ensure =20
the availability of interoperable receivers.

As discussed in the July 9, 2007 submission by Common Cause, Consumer =20=

Federation of America, Consumers Union and Free Press, the merging =20
parties have not been willing to make interoperable receivers =20
available to the public, because they have sought to avoid the =20
additional inter-service competition.   The groups also noted the =20
failure of XM and Sirius to offer pro-competitive or consumer =20
friendly options regarding bundles of channels.[1]

The lack of interoperability and other anti-consumer conduct has =20
undoubtedly made the overall satellite market smaller in terms of =20
subscribers.

Reportedly, in an effort to make the merger more attractive, Sirius =20
and XM have belatedly offered greater choices in terms of unbundled =20
services, if the merger is approved.[2]   The FCC should reject this =20
proposal as a rationale to accept the monopoly, for several =20
reasons.   First, the proposed pricing plans, like other proposals on =20=

temporary price ceilings, do not represent a long-term sustainable =20
guarantee for consumers.  These are more like short-term PR stunts, =20
designed to obscure the fact that the merger will create a monopoly, =20
and over the longer term, monopoly pricing will harm consumers.   =20
Second, the proposal provides yet more evidence that the two =20
companies can provide better ways to address consumer concerns =20
regarding access to content, than to create a monopoly.

The success of the Internet and the many services delivered over the =20
Internet is closely tied to the development of interoperable =20
services, and open technology standards, and enormous choice.   The =20
FCC should first reject the creation of a monopoly, and then focus =20
its attention on the availability of interoperable receivers, and =20
policies that ensure that consumers can benefit from greater =20
unbundling of content.    The FCC should be creating more, rather =20
than less, competition.


Respectfully submitted,

July 24, 2007
James Love
Director
Knowledge Ecology International
james.love@keionline.org

WASHINGTON 1621 Connecticut Ave. NW, Suite 500, Washington, DC 20009 =20
TEL: +1 202 332 2670 =B7 FAX +1.202.332.2673
GENEVE 1 Route des Morillons, CP 2100, 1211 Gen=E8ve 2, Switzerland =20
TEL: +41 22 791 6727
LONDON 24 Highbury Crescent, London, N5 1RX,UK TEL:+44(0)207 226 =20
6663, ex 252 =B7 FAX: +44(0)207 354 0607

---------------
[1] =93Not only are prices high, but also the consumer is offered only =20=

large bundles of channels over which they have no choice. Consumer =20
choice and consumer sovereignty are denied. In a product market where =20=

the marginal production cost of adding subscribers is almost zero, =20
the bundling strategy is largely anti-consumer.=94 Common Cause, =20
Consumer Federation of America, Consumers Union and Free Press, July =20
9, 2007, Page 44.
[2] REUTERS, XM, Sirius Promise Low Cost Packages, More Choice, in =20
NTTimes.Com, July 23, 2007.  Stephen Labaton, "Radio Plan: A Price =20
Shift for Satellite," New York Times, July 24, 2007.  According to =20
Labaton:
Hoping to persuade skeptical regulators to approve their proposed =20
merger, the nation=92s two satellite radio companies announced detailed =20=

plans Monday to give consumers the ability to choose the programs =20
that make up their subscription package. The companies, Sirius =20
Satellite Radio and XM Satellite Radio, said they would offer two "a =20
la carte" pricing plans. One would enable consumers to purchase the =20
best of the premium services now offered by each company =97 like =20
professional football, baseball and basketball =97 for a monthly fee of =20=

$14.99. For $6.99 a month, the other would enable listeners to choose =20=

50 of the nonpremium channels, with each additional channel costing =20
25 cents. To subscribe to the "=E0 la carte" plans, consumers would =20
have to buy new radios. The companies said they would also let =20
listeners select "family friendly" and other rate plans and would =20
give subscribers a $1 a month credit if they asked to have stations =20
with adult content blocked. Consumers who do not want to change their =20=

existing service would not see any changes in their current monthly =20
bill of $12.95.

----------------------------------------------
James Packard Love
Knowledge Ecology International
mailto:james.love@keionline.org
tel. +1.202.332.2670 / U.S. mobile+1.202.361.3040, Geneva mobile =20
+41.76.413.6584

"If everyone thinks the same: No one thinks." Bill Walton"