U.S. Electronics: XM-Sirius Commitments Don’t Go Far Enough
A proponent of open equipment for satellite radio called XM-Sirius’ voluntary commitment “a sham.” If the open access condition “is to be structured the way Sirius has proposed, then we have problems -- big problems,” Charles Helein, outside counsel for U.S. Electronics, told us.
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In an attempt to have their merger approved, XM and Sirius submitted a commitment letter to the FCC Friday but it wasn’t posted to the commission’s website until Tuesday morning. FCC Chairman Kevin Martin alluded to the voluntary commitments in his weekend statement announcing he would agree to the proposed merger (CD June 17 p1).
“XM and Sirius have demonstrated that consumers will benefit substantially and the public interest will be served by approval of this transaction,” said the letter written by former FCC Chairman Richard Wiley, Sirius outside counsel, and Gary Epstein, outside counsel for XM. “The Commission should not impose conditions in this proceeding that will have the effect of reducing these public-interest benefits,” they said.
Within a year of merging, the combined company “shall offer for license, on commercially reasonable and non- discriminatory terms, the intellectual property it owns and controls of the basic functionality of satellite radios that is necessary to independently design, develop and have manufactured satellite radios,” the lawyers wrote.
That’s not good enough for Helein. XM-Sirius “will still have a year to putz around with pet manufacturers,” he said. XM-Sirius “have to get out of the equipment manufacturing business just as the Bells had to get out of the telephone manufacturing business,” he said.
U.S. Electronics will visit the commission again to stress how the open equipment condition should be structured, Helein said. Another must for U.S. Electronics is an independent monitor “so the combined company doesn’t play games,” he told us.
Set-Aside Channels
The combined company also agreed to lease 4 percent of its channel capacity -- currently 12 channels -- for minority programming. “The Qualified Entity or Entities will not be required to make any lease payments for such channels. The combined company is willing not to be involved in the selection of the Qualified Entity or Entities. The combined company will have no editorial control over these,” said Wiley and Epstein.
“How is it a lease if there is no payment?” asked one observer. It also appears that this programming would be available only to XM and Sirius subscribers, so it doesn’t appear to address some of the competition concerns expressed by various parties including broadcasters and Georgetown Partners, said various sources.
XM and Sirius’ voluntary commitments were rewritten into a proposed order, which was circulated late Monday, FCC sources said. The circulated item also contains a competitive analysis of the deal and addresses concerns by deal opponents, said one FCC official.
One of those opponents, the Consumer Coalition for Competition in Satellite Radio (C3SR), said Martin had agreed to approve the merger “with a very minimal package of concessions.” C3SR, which is supported by NAB, has been arguing for the commission to release documents that have been under seal. “The entire FCC process is now unreasonably shrouded in secrecy,” said Julian Shepard, C3SR counsel. “Sirius and XM are trading on the secrecy of the highly confidential documents in the court of public opinion. They have refused to come forth with the facts. In public, Sirius and XM are denying the facts in the highly confidential documents, but they have not submitted any evidence to support their denial. Meanwhile, Sirius and XM are saying what they wish in private ex parte meetings with the FCC,” Shepard said.