Consumers Beware: Don’t Expect Combined XM and Sirius Radio for $12.95 a Month

xm sirius mergeThe satellite radio companies are not coming clean with American consumers about their pricing plans under a combined company, according to the testimony of Consumers Union, Consumer Federation of America and Free Press before today’s House Telecommunications Subcommittee hearing. (Click here [PDF file] to read the full testimony.)

“The heads of XM and Sirius want consumers to believe that prices won’t rise after a merger, but that’s probably not the case. By highlighting a price freeze for the old package of services, they leave the impression that’s what consumers will pay for the new, combined offerings. But they haven’t really said what the new prices will be,” said Gene Kimmelman, Vice President of International and Federal Affairs at Consumers Union.

In addition to urging careful scrutiny of the impact the merger could have on consumer prices and choices, the organizations called upon Congress and federal regulators to address the lack of competition, lack of local content, and lack of diversity in ownership in the current radio marketplace.

“The XM-Sirius merger simply cannot be considered in a vacuum, independent of the deplorable state of competition in radio, the needs of radio listeners and communities for sources of diverse local news and information, and the significant barriers facing independent artists and commentators and would-be minority station owners,” Kimmelman said.

“It is time to take advantage of digital technological breakthroughs and devise incentives to expand local and minority ownership opportunities in radio and other media and to hold the line against the greatest threat to a competitive and diverse media: mergers that concentrate ownership in too few hands,” according to Kimmelman. .

“Offers of conditions on the mergers should be taken with a grain of salt,” said Mark Cooper, Director of Research for the Consumer Federation of America. “The recent track record of conditions has been abysmal and the satellite radio industry has already proven that it cannot be trusted to live up to conditions imposed on it.”

The satellite radio licenses were issued in 1997 subject to the condition that the licensees never merge. The licensees promised to offer the public interoperable radios that would work with both systems. Ten years have passed and there is no such interoperability. “In short, from day one the satellite radio companies have failed to meet the conditions of their licenses and the public has suffered as a result,” added Cooper.

The groups called on Congress, the Federal Communications Commission and antitrust authorities to put the brakes on the merger unless and until significant questions on competition, and consumer impacts are fully addressed and satisfactorily answered.

Consumers Union is a nonprofit membership organization chartered in 1936 under the laws of the state of New York to Provide consumers with information, education and counsel about good, services, health and personal finance, and to initiate and cooperate with individual and group efforts to maintain and enhance the quality of life for consumers. Consumers Union’s income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on Consumers Union’s own product testing, Consumer Reports with more than 5 million paid circulation, regularly, carries articles on health, product safety, marketplace economics and legislative, judicial and regulatory actions which affect consumer welfare. Consumers Union’s publications carry no advertising and receive no commercial support.

The Consumer Federation of America is the nation’s largest consumer advocacy group, composed of over 280 state and local affiliates representing consumer, senior, citizen, low-income, labor, farm, public power an cooperative organizations, with more than 50 million individual members.

Free Press is a national, nonpartisan organization with over 350,000 members working to increase informed public participation in crucial media and communications policy debates.

Filed in: Industry Buzz

  • alister

    From what I understand the rates are not going up. You may be able to get a lower rate by going ala carte. I have not interest in any of the channels that XM carries so I will just stick with my Sirius only package and continue paying the same rate.

  • kaseiffert

    Yeah thats the way I understand it too, you can pick either XM content or Sirius Content for $12.95/mo or, pick your content ala cart style (most likely for a premium)

    Whats interesting is what this will become. By unifying the two competeing companies they are basically creating cable for radio… I mean doing for radio what cable tv did for television. Eventually there probably will be a flat rate for most everything just as cable is now, and any show will be able to be easily syndicated over it.

    As much as I am an XM fanboy I think this is the way things have to go. <–the xm posts on my blog, if anyone cares :)

  • Trimtab

    I’ve had the opportunity to use both and neither is worth their current prices. So a merger that does not combine all their services at the same $13 price point is not going to save either one of them. Even then I think the price has to drop substantially.

    They have a good niche for travelers and truckers, but beyond that I (and anyone else) can do better with downloaded podcasts and music with much better audio quailty and no dropouts for zip in subscription fees.