Terrestrial Radio still trying to convince the FCC that increasing consumer choice is really a bad thing.
It used to be that a true monopoly in this country of ours was something everyone could easily point at and agree on. It had names like Standard Oil, or “Ma Bell, companies that ruled our lives with an invisible capitalist iron fist that kept prices artificially high and consumer choice low. The term only described companies that controlled resources vital to our very survival and for which we had no other alternative means of acquiring at our disposal.
Now a monopoly is defined as the “Exclusive control by one group of the means of producing or selling a commodity or service.” Technically, XM and Sirius Satellite Radio will have a “monopoly” on transmitting content to subscribers’ receivers, i.e. satellite “service,” but they have no such monopoly on transmitting content to the locations themselves where the receivers are located. How can something be a monopoly if a consumer still has the freedom to choose what he wants and how he gets it?
As Mel Karmazin, CEO of Sirius, points out in a recent op-ed piece in The Washington Times, “The audio entertainment market today is brimming with competition and will be even more competitive after our merger. MP3 players, iPods, HD radio, Internet radio, satellite radio and mobile phones are revolutionizing the listening experience. There has never been a better time to be a consumer.”
My point exactly. It’s the issue of content selection and choice that should be the main discussion point of the merger, and not it’s delivery. If a guy can buy gasoline at a variety of prices from several different sources, is it fair and equitable to single out a single method of distribution? The consumer doesn’t care so long as he gets the best deal at the best price. Terrestrial radio’s free, and thus consumers will be more naturally inclined to listen to it instead, that is, of course, unless the content is poor and unappealing.
If terrestrial radio is FREE shouldn’t its job of acquiring listeners be far easier than a company trying to charge $12.95 a month? If you can’t convince consumers to use a free service than don’t you think that your company has far greater issues to worry about? I guess if you can’t give it away then forcing it on people is really the only option left.
The beauty of of Satellite Radio is that it’s a SUBSCRIPTION-BASED service, meaning that if you don’t like it you don’t have to pay for it. It’s this very economic incentive that serves to compel both XM and Sirius Satellite Radio to provide the best quality service at the lowest price possible.Why? Because people will stop subscribing if they fail to do so. Charge too much or offer too little and consumers will leave and find an alternative.
It’s with consumers in mind that Karamazin devised a concrete plan for content offerings and pricing if, and hopefully after, the merger between XM and Sirius is approved by the FCC. The “A La Carte Programming” options which I discussed before, allows consumers to choose content channels from a combined company at lower prices than they are currently, or for the complacent, to leave things as is with the same price and selection.
So choices and selection are expanded for subscribers yet, terrestrial radio has the gumption to call the merger a loss for consumers that will create an “anti-competitive” entity.” Say what?
The NAB, the group that “represents” 8,300 free, local radio, and television stations has even gone so far as to call Karmazin’s “A La Carte” programming “A La Sham,” and has even devised an ingenious method to claim that prices for consumers will actually go up.
Its “Where’s the Deal – XM/Sirius A La Carte = A La Sham” rebuttal tries to poke holes in Karmazin’s claims that the merger will be beneficial to satellite radio subscribers.What the NAB does is break down individual package pricing on a per channel basis, and then notes the variance in price from the current package baseline.
It notes how each channel costs 8cents on XM and 10cents on Sirius, and then how each price varies according to what package you buy. An example is how the A La Carte I package offering 50 channels from either service at a cost of $6.99 a month will then mean that each of those channels will cost the consumer 14 cents apiece. But, again, being that the consumer can stick with the package he already has, doesn’t this really mean that he just has another choice in terms of pricing and even more importantly of selection being that he can get 50 channels from either service?
Leave it to the NAB to try and twist the facts to suit it own need, and it further illustrates what it fears most from the merger- competition. If it doesn’t actually compete with satellite radio then why is it even allowed to chime in with the FCC in the first place? Is it as a “friend of the court” or a “friend of consumers” that it’s so vocal in fighting the proposed merger?
Moreover, as Karmazin points out, “…our combined company will still be a relative small fry, accounting for only 3.4 percent of radio listeners.” So why all the fuss by the NAB? One word – competition, and it’s for this reason that the merger will not create a monopoly and that this “A La Sham” business is really just a bunch of “A La BS.”
***BTW, for those of you keeping tabs, it’s now officially “Day 60‘” of the FCC’s ongoing hearings into whether the merger should be approved. To get involved and show your support for the merger use up the NAB’s bandwidth HERE and tell the FCC to vote for its approval.
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