Satellite Radio's New Local Content Riles Broadcasters
By SARAH MCBRIDE
Staff Reporter of THE WALL STREET JOURNAL
July 25, 2005; Page B1
http://online.wsj.com/article/0,,SB112225495906094590,00.html?mod=technology_main_whats_news
Local traffic and weather reports are among the most basic services radio
can provide. Now, these features are the latest front in a widening battle
between broadcasters and their upstart satellite radio competitors.
XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. are moving
quickly to add local features to their services, hoping to make a dent in a
stronghold of traditional broadcasters. Both XM and Sirius already offer
traffic and weather channels in certain major markets.
Now both companies show signs of wanting a bigger local presence. XM
recently made a deal to buy additional spectrum that will enable it to
offer more elaborate services in some markets. Last month, Sirius said it
had developed technology that would allow it to squeeze 25% more capacity
from its share of the spectrum, potentially enabling it to offer more
locally tailored programming.
The plans could allow satellite broadcasters to go further in offering
services aimed at specific cities or regions, such as local news,
interviews with personalities and political candidates, or shows directed
at ethnic markets, such as Filipinos living in Los Angeles.
These possibilities have amplified an already loud cry from traditional
radio broadcasters, who see the localization efforts by XM and Sirius as an
invasion of their turf. These terrestrial broadcasters have used the
absence of local content on satellite as a way to dismiss the new medium,
saying local features allow their own stations to connect with their
listeners in ways satellite can only dream about. If satellite services
continue fine-tuning their content for specific markets, regular radio
stations could lose that advantage -- and, potentially, the accompanying
advertising dollars.
Longtime radio broadcasters say that is a betrayal of satellite's formal
mandate. They argue that, when the Federal Communications Commission agreed
to award satellite radio licenses in 1997, it acted with the understanding
that satellite would be a national service only. Satellite providers say
they never made such a promise, and there is nothing in their licensing
agreements forbidding local programming.
Broadcasters already have been hammering at the issue, with many running
announcements that put down their satellite competitors' lack of
localization. "I like the radio I already have -- the local news, the local
weather," a woman explains in one spot run by radio station chain Entercom
Communications Corp., which ends with the tag line, "Brought to you by your
hometown station."
The National Association of Broadcasters, the TV and radio industry's main
trade group, has seized on XM's spectrum acquisition as a chance to rally
forces against satellite's advances into local content. XM is acquiring WCS
Wireless LLC, a Carson City, Nev., company that controls parts of the
wireless spectrum right next to XM's satellite radio spectrum in key areas.
Buying that spectrum will enable XM to target local markets and create data
services, video or other programming specifically for those cities.
The FCC just opened a comment period for the acquisition, a routine
procedure for any license transfer. "We'll be taking the opportunity to
make our case," says an NAB spokesman. That will likely unleash a flood of
comments from radio executives saying that satellite should stay out of
local radio.
But the NAB isn't waiting on the FCC. The day after XM announced its plans,
NAB President Eddie Fritts sent a letter to every member of the House of
Representatives, calling XM's pending acquisition "part of a longstanding
pattern of deception by the satellite radio industry."
He asked members to support a bill introduced this year by Chip Pickering
(R., Miss.) and Gene Green (D., Texas) that would prevent satellite
services from using their on-the-ground repeaters, which strengthen the
national satellite signal in certain areas, to deliver content to some
locations and not others.
The bill also would mandate the FCC to examine the legality of delivering
local content on nationally distributed channels and would forbid satellite
radio from using any technology created in the future to deliver local
content. So far, the bill is stuck at the subcommittee level with little
chance of seeing action before the autumn at earliest.
As recently as December 2003, XM pledged that it wouldn't use its array of
local satellite repeaters to deliver content only to specific markets. The
spectrum XM is buying from WCS wouldn't be covered under that agreement
because it isn't part of the satellite band, but instead uses a different
frequency. At least for now, XM isn't handcuffed when it comes to using
that WCS spectrum.
"WCS rules are very flexible," says an FCC spokesman. "You can use [WCS] to
do anything for which the spectrum is allocated." That includes fixed,
mobile or broadcast satellite transmissions, he says, adding there are no
rules requiring WCS content to come via a satellite or a national feed. The
FCC typically approves license transfers in about 60 days; XM filed its
application July 15.
Local weather and traffic snuck onto satellite radio early last year by
using channel space with national reach to deliver local information.
Sirius channel 153, for example, includes traffic and weather for both Los
Angeles and San Diego; it is accessible elsewhere, but not likely of much
use to people outside those areas.
The setup allows satellite operators to say the channels are national, even
if they are of interest only to certain communities. With XM's eventual use
of WCS technology, it could target content to individual markets.
In April 2004, the National Association of Broadcasters filed a petition
with the FCC to try to prevent XM and Sirius offering locally oriented
content all over the country, saying the services violated XM's and
Sirius's licenses.
XM and Sirius rallied powerful supporters such as the Consumer Electronics
Association and the Department of Transportation. XM also got thousands of
its subscribers to weigh in with the FCC. In November, the NAB withdrew the
petition, saying it needed to present a fuller picture of how satellite's
moves would hurt broadcasters.
Mr. Parsons, XM's chairman, declined to comment on XM's exact plans for the
new spectrum. He noted it could offer more programming and data services,
such as audio books, in local markets. XM already offers a real-time
traffic service separately from its radio service that helps drivers by
indicating the least-crowded routes on a display screen.
The service, called XM NavTraffic, requires customers to buy a special
screen and pay a monthly fee; XM radio subscribers get these traffic
subscriptions at a discount.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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