Someone give FCC chairman Kevin Martin a Red Bull, because he's definitely asleep on the job. How else can we explain the thumbs up recently given to both the Sirius/XM and Verizon/Alltel mergers on his watch? While Martin happily panders to the public with far-flung plans for free, nationwide wireless Web access (that'll be the day…), he's been delinquent with the most important of duties charged to him: shielding us from the unfair business practices of monopolies. What happened to the FCC that had our best interests in mind when it dismantled Ma Bell in 1984? Today, monopolies are proliferating like some near-extinct species that's been nursed back to health on a wildlife preserve—and it's the FCC that's doing the bottle-feeding! Shareholders may win the lottery in the short term, but in the long run we all lose.
What good is possibly going to come of the Sirius/XM merger? According to the Department of Justice, which had to approve the deal before the FCC signoff, the consumer can look forward to lower prices, more programming options and new technology. When Martin chimed in on behalf of the FCC it was to merely add that, "The merger is in the public interest and will provide consumers with greater flexibility and choices." Now, I will concede that new technology is definitely on the way—the FCC stipulated that Sirius XM not enter into any exclusive agreements with hardware makers and that it allow its signal to be picked up by any device that wants it. That opens up the door to things like cell phones with integrated satellite tuners, which could actually be pretty awesome. But, lower prices and more programming options? Did someone spike the drinking water in D.C.? When has a monopoly ever resulted in lower prices or more options for the consumer? The FCC is also requiring that Sirius XM keep prices capped at $12.95 per month for three years. But, after that comes and goes the consumer will have just one option if and when prices climb: cancellation.
And, that's really the only competition the satellite singularity might face: the economy. Some folks argue that Sirius XM will be kept honest by digital music players and Internet radio, but that doesn't help current subscribers. If Sirius XM customers have anything going for them, it's the fact that the satellite operator can't afford to lose them. Unfortunately, the economy is also the very thing that will ultimately screw the satellite consumer. Think about it: The new company is inevitably going to have programming redundancies, and those will be the first to go as the belt-tightening begins. So much for more programming options. Personnel redundancies will lead to layoffs, which means money needs to be spent right now on severance and early-retirement packages. The auto industry is reeling, which translates to fewer cars being sold with built-in satellite radios. Plus, $12.95 per month isn't as trivial an expense as it once was. Is this a climate in which lower prices are even a remote possibility? Of course not. If prices are lowered, it'll just be a parlor trick to attract new customers before they're quickly readjusted.
I'm not a satellite subscriber, though, so the Sirius XM thing hasn't affected me terribly—I'm really just upset with the FCC for kowtowing to big business. The Verizon/Alltel marriage, though, is a much bigger deal. It seems the FCC believes a very small, very antiquated group of bloated businesses can serve the customer better than a competitive marketplace. What's going on in the wireless telco industry, anyway? AT&T becomes Cingular then gets swallowed by AT&T again (I still have trouble wrapping my head around that one), Sprint and Nextel join forces to become something more horrible than the two companies ever achieved separately, Virgin gobbles Helio and now Verizon has sucked up Alltel. I liked Alltel. Though I never once used the service, the company was the only spark of anything resembling competition in the wretched oligopoly that is the United States mobile telecommunications industry. As a Verizon customer myself, I'd love a piece of that My Circle plan Alltel has, which allows you to call selected people for free no matter what network they're on. I'd also love it if Verizon ditched the God-awful "Can you hear me now?" guy for the lesser of two evils: Alltel's blonde himbo of a mascot, Chad. But, you can bet both are in Verizon's crosshairs as I write this.
The point to my rambling is this: Though we're getting creamed by a recession, our government is smothering competition and fostering monopolies (or monopoly-like market conditions) by allowing big business to expand through merger and acquisition. And, I haven't even touched on the regional monopolies enjoyed by cable operators since the 1996 Telecommunications Act—that's a whole other topic for another day. But, I do wonder what's next . . . two or three firms in charge of the Internet? Whether we're talking satellite radio, cellphones, cable or anything else, it's clear that Washington has no love for the American consumer. Let's forget better products, improved technology and more consumer choice for a minute. The correlation between competition and lower prices is an obvious one, and I for one could use some lower prices right about now.
Are you as troubled as I am by these recent mergers, or do you think some good will come of them? Do you have a different forecast for the future of Sirius XM? Hit up the comments section and share!
What do you expect? The big companies paid for the politicians and are getting a VERY nice return on their dollar - that's why they "contributed" so much. We really do have the best government money can buy, and thinking that government has the interests of the consumers as a priority is just plain naive.
I think the alternative to the XM/sirius merger was worse, bankruptcy. I am a subscriber to Sirius and the thought of one or the other going out of business was horrible. I look forward to the merger and the merging of services.
Monopoly!? XM/Sirius is still competing against FREE radio.
Actually, Cingular branched out from AT&T then Cingular swallowed AT&T but kept the AT&T name.
XM/Sirius may be the only satellite radio providers, but their merger creates no monopoly. They have to complete with AM/FM radio, internet radio, podcasts, and all other portable media.
It is similar to the WWE/WCW merger years back. They were the only big players in the game, but they still have to compete with everything else on television, and more directly with the rising popularity of MMA.
In both cases, if the norm WWE, XM/Sirius, stagnate and don't provide customers/viewers with quality entertainment, they will go elsewhere for it.
The writer is obviously out of touch with reality. XM and Sirius where on the verge of closing up shop and where would that have left customers? This merger allows one satellite provider to supply all the sports coverage instead of it being split. It will increase content for both stations. Some will get cut because of redundancy but there will be much more available overall. As others have stated they are still competing with free radio. Which is getting better with the introduction of HD radio.
I agree with both sides, if that's possible! However I don't have more $ to fork over to another corporation, so no satellite radio for me! One thing I would like to add-skwigger had an interesting analogy, but do you pay for WWE or WCW? The point is there is NO OTHER company making money off satellite radio, not one! They make every penny of satellite radio sales. Must be a lot easier for them to forecast earnings against competitors...
Tom, this is why a science/tech writer shouldn’t cover economics topics.
First, you need to learn the difference between Monopoly (one dominate) and Oligopoly (few)…..Very different markets. Oligopolies can be quite competitive…In fact; a duopoly (two) can be extremely competitive. Ex: Think Airbus and Boeing or (for something closer to the topic) some of the areas where Verizon and AT&T are going head-to-head with the cable companies.
After you understand those basic concepts wrap your scientific/techy brain around the concepts of direct and indirect competition. If you don't think that Sat radio competes against terrestrial radio, podcasts and even internet radio (ex Pandora on a mobile phone), you might want to stick to science/tech only subjects
As for AT&T/Cingular, Sprint/Nextel and Verizon/Alltel - they are all terrible. I do agree Alltel seemed to be onto something, but obviously sold out like whores instead of continuing to grow and provide us all with an honestly decent alternative provider. Full disclosure: I'm a 6-year-long Sprint personal & business customer (6 lines & 1 data card in total).
My primary comment is directed toward all the fuss being made over the XM/Sirius merger. Everyone needs to sit down and shut up about it. This is PREMIUM consumer service intended for PREMIUM customers who can afford to pay for it. It is NOT a welfare/government project that is a god-given birthright. Had things worked out differently in the beginning, and only one of them had ever emerged on the market, would everyone be griping that "it isn't fair" to the public? I think not.
Just because some people drive a Lexus, and the next guy can only afford a Civic, that doesn't give all the Civic owners any grounds to have a fit that they can't drive a luxury car. It's called Capitalism, folks! Market-driven supply & demand...the haves and the have-nots are part of the system, as are investors who pony up money in risky startups developing new technology/services just like XM/Sirius.