Media Monopolies
Congress is preparing to decide whether or not they should allow XM Satellite Radio and Sirius Satellite radio to merge. The two companies represent the entire industry of Satellite radio, a subscription only service that gained a whole lot of notoriety when Howard Stern left terrestrial radio for Sirius. Stern highlighted one of the benefits of satellite based subscription radio: the lack of FCC censorship.
The freedom to shout out f-bombs across the air is not the only reason subscribers choose satellite radio. The fact that many channels are commercial free, for instance, or the accessibility of various, non-local sports broadcasts are two other reasons people pay for what they could otherwise have for free.
But that's not what is at issue. The problem that has cropped up is that XM and Sirius radio, in an effort to draw in new subscribers, sought out expensive on air talent. They signed absurd financial contracts with radio personalities like Stern, Oprah, and Martha Stewart, as well as cutting multi-million dollar broadcast deals with major sports franchises. And as it turns out, they've been spending a whole lot more than they collect from subscribers each month.
The key to all this of course is that satellite radio cannot be received through regular radio transmissions. Instead, a special receiver that decodes the encrypted electronic signal from the satellite keeps non-subscribers from picking up the signals for free standard land based radio transmissions have worked for a hundred years. Like cable television, satellite radio is a premium service. Congress is now considering whether or not the combined company, representing the whole of the satellite radio industry would become a monopoly, and one that would take advantage of customers.
Opponents of the merger claim that the satellite companies, once combined, will form a monopoly resulting ultimately in the gouging of customers. The satellite companies are arguing on the other hand that there is plenty of competition: free terrestrial radio in the FM and AM band. XM and Sirius are also making claims that internet radio is a competitor.
At the moment it seems that Congress is likely to deny the merger on the grounds that the XM and Sirius would become a monopoly, and that AM and FM radio is such a significantly different market that they wouldn't really be competition with the uber-satellite company. But if this is the case, its probably time for Congress to do something about the cable industry.
Cable television, like satellite radio, is pay for service broadcast system. While the FCC still regulates things on basic cable, premium channels offer everything from cursing to penetrative sex. The cable world is largely a laissez faire environment when it comes to censorship. Like satellite radio, Cable has "competition" from free over the air television broadcasts. Cable television does have the additional competition from satellite television, but satellite television does not offer broadband internet service, a major utility now. As of this year, half of US Households will have broadband, and that number will probably reach eighty percent by 2010. Many, if not most of those users receive broadband from their cable television provider.
Broadband internet is a relatively new utility for the residential consumer, much like satellite radio or even satellite television. But it is fast replacing other utilities-- local and long distance phone service, for instance, has already been pillaged by voice over broadband internet. Internet radio has become to pop up as demonstrated by XM and Sirius to cite it has a competitor. Television services will also soon be replaced as a next generation of broadband applications rolls out. But at least for now, cable television operators have largely held a monopoly on broadband internet services. The only competition that comes close is DSL service from telecommunications companies, though DSL is remarkably slower than true broadband access.
To this end, Cable television and Satellite radio are essentially the same components of identical industries. Cable television competes with free television just like satellite radio competes with free radio. While there are several large cable distributors, and a few dozen smaller operators, rarely do any of these companies actually compete for market share. Indeed, most markets are served by a single cable operator. If Congress is to prohibit the merger of XM and Sirius, then they must also create competition in the cable market. The precedent has been set. Cable is an approved monopoly, and so there is no reason XM and Sirius cannot also be an approved monopoly.
The freedom to shout out f-bombs across the air is not the only reason subscribers choose satellite radio. The fact that many channels are commercial free, for instance, or the accessibility of various, non-local sports broadcasts are two other reasons people pay for what they could otherwise have for free.
But that's not what is at issue. The problem that has cropped up is that XM and Sirius radio, in an effort to draw in new subscribers, sought out expensive on air talent. They signed absurd financial contracts with radio personalities like Stern, Oprah, and Martha Stewart, as well as cutting multi-million dollar broadcast deals with major sports franchises. And as it turns out, they've been spending a whole lot more than they collect from subscribers each month.
The key to all this of course is that satellite radio cannot be received through regular radio transmissions. Instead, a special receiver that decodes the encrypted electronic signal from the satellite keeps non-subscribers from picking up the signals for free standard land based radio transmissions have worked for a hundred years. Like cable television, satellite radio is a premium service. Congress is now considering whether or not the combined company, representing the whole of the satellite radio industry would become a monopoly, and one that would take advantage of customers.
Opponents of the merger claim that the satellite companies, once combined, will form a monopoly resulting ultimately in the gouging of customers. The satellite companies are arguing on the other hand that there is plenty of competition: free terrestrial radio in the FM and AM band. XM and Sirius are also making claims that internet radio is a competitor.
At the moment it seems that Congress is likely to deny the merger on the grounds that the XM and Sirius would become a monopoly, and that AM and FM radio is such a significantly different market that they wouldn't really be competition with the uber-satellite company. But if this is the case, its probably time for Congress to do something about the cable industry.
Cable television, like satellite radio, is pay for service broadcast system. While the FCC still regulates things on basic cable, premium channels offer everything from cursing to penetrative sex. The cable world is largely a laissez faire environment when it comes to censorship. Like satellite radio, Cable has "competition" from free over the air television broadcasts. Cable television does have the additional competition from satellite television, but satellite television does not offer broadband internet service, a major utility now. As of this year, half of US Households will have broadband, and that number will probably reach eighty percent by 2010. Many, if not most of those users receive broadband from their cable television provider.
Broadband internet is a relatively new utility for the residential consumer, much like satellite radio or even satellite television. But it is fast replacing other utilities-- local and long distance phone service, for instance, has already been pillaged by voice over broadband internet. Internet radio has become to pop up as demonstrated by XM and Sirius to cite it has a competitor. Television services will also soon be replaced as a next generation of broadband applications rolls out. But at least for now, cable television operators have largely held a monopoly on broadband internet services. The only competition that comes close is DSL service from telecommunications companies, though DSL is remarkably slower than true broadband access.
To this end, Cable television and Satellite radio are essentially the same components of identical industries. Cable television competes with free television just like satellite radio competes with free radio. While there are several large cable distributors, and a few dozen smaller operators, rarely do any of these companies actually compete for market share. Indeed, most markets are served by a single cable operator. If Congress is to prohibit the merger of XM and Sirius, then they must also create competition in the cable market. The precedent has been set. Cable is an approved monopoly, and so there is no reason XM and Sirius cannot also be an approved monopoly.
Labels: Consumerism
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