Grasshopper
07-09-2007, 04:49 AM
A former Federal Communications Commissioner conducted a study on behalf of Sirius and rival XM on the companies' pending $13 billion merger. In it, the former regulator-turned-economist said the audio entertainment delivery industry is such that disallowing satellite radio's right to unify would not be in consumers' best interest.
According to Harold W. Furchtgott-Roth, a Republican FCC commissioner from 1997-2001, economic factors and potential changes in the communications industries have afforded American consumers a wide range of services that compete with satellite radio. These competing services dictate how much Sirius and XM can charge for their service, he said, and whether or not the companies actually merge, regulators "should afford these companies the flexibility to respond to rapidly changing market conditions."
In the report titled, "An Economic Review of the Proposed Merger of XM Sirius," Furchtgott-Roth found that practically all of the programming available via satellite radio can be obtained elsewhere, and if a combined XM/Sirius were to raise prices, consumers could find identical or similar programming from a competing service. "The FCC has taken note of this trend toward a broader mobile services market in other proceedings, and it should maintain that position when evaluating this merger" as well, he said.
The report said that the FCC has recognized shifting market conditions in reviewing license transfer applications in past merger reviews. Being such, "the merger is consistent with the government's efforts to facilitate deployment of advanced communications services and would also promote efforts to complete required regulation of SDARS licensees, specifically the coordination of the 2.3 Ghz spectrum with WCS licensees."
Given the complex nature of satellite radio's technology, and the time required to develop and launch them, the report said sat operators have an unusually long planning horizon. Rapid changes in communications services create an atmosphere in which technologies relevant today may become obsolete in just a few short months. The report concludes that a "failure to provide satellite operators with flexibility in adjusting plans can lead to unforeseeable harmful consequences."
According to Harold W. Furchtgott-Roth, a Republican FCC commissioner from 1997-2001, economic factors and potential changes in the communications industries have afforded American consumers a wide range of services that compete with satellite radio. These competing services dictate how much Sirius and XM can charge for their service, he said, and whether or not the companies actually merge, regulators "should afford these companies the flexibility to respond to rapidly changing market conditions."
In the report titled, "An Economic Review of the Proposed Merger of XM Sirius," Furchtgott-Roth found that practically all of the programming available via satellite radio can be obtained elsewhere, and if a combined XM/Sirius were to raise prices, consumers could find identical or similar programming from a competing service. "The FCC has taken note of this trend toward a broader mobile services market in other proceedings, and it should maintain that position when evaluating this merger" as well, he said.
The report said that the FCC has recognized shifting market conditions in reviewing license transfer applications in past merger reviews. Being such, "the merger is consistent with the government's efforts to facilitate deployment of advanced communications services and would also promote efforts to complete required regulation of SDARS licensees, specifically the coordination of the 2.3 Ghz spectrum with WCS licensees."
Given the complex nature of satellite radio's technology, and the time required to develop and launch them, the report said sat operators have an unusually long planning horizon. Rapid changes in communications services create an atmosphere in which technologies relevant today may become obsolete in just a few short months. The report concludes that a "failure to provide satellite operators with flexibility in adjusting plans can lead to unforeseeable harmful consequences."