Approve XM-Sirius Merger, Ex-FCC Commissioner Argues
XM and Sirius compete not only with one other but with “terrestrial radio, pre-recorded music devices, mobile phones, and fixed and mobile internet services,” economist and former FCC Commissioner Harold Furchtgott-Roth said. His new report addresses an issue on which the merger’s fate likely hinges: In terms of assessing market power, is satellite radio a unique market or part of a much larger world?
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The latest in a line of studies from XM-Sirius could be the most significant, in that FCC Chairman Kevin Martin had Furchtgott-Roth as a mentor while serving as the older man’s legal advisor during his Commission tenure. The satellite operators already have in their corner former FCC Chairman Richard Wiley, longtime counsel to Sirius and another Martin mentor courtesy of his role at Wiley Rein and Fielding, where the Chairman worked before coming to the FCC.
“The asserted view that satellite radio is an isolated antitrust market is inconsistent with basic observations about this market. Satellite radio has a small presence in comparison to other comparable communications services,” Furchtgott-Roth said in his report. He cited the variety of fixed and mobile alternatives, noting that more loom. “The 14.5 million satellite radio subscribers pales in comparison to the 237 million mobile phones in use today,” he wrote. “Many of those phones allow users to access wireless data services as well as to download and to play music.”
Ever more vehicles can access mobile Internet services, the report said. “These competing choices discipline the prices that XM and Sirius charge subscribers today and will continue to do so regardless of whether the firms merge,” it said. “If a combined satellite radio provider were to raise prices, consumers could find identical or similar programming elsewhere and switch services.”
The proposed merger can be seen as arising from the competitive environment that the FCC has encouraged, said Furchtgott-Roth. “The FCC in many proceedings has facilitated the commercial availability of new technologies that compete with satellite radio and other services,” he said, urging that the agency and counterparts elsewhere in government not ignore “substantial federal efforts to promote both fixed and mobile communications services that compete with satellite radio services.”