XM-Sirius merger -- why not?

There's been lots of coverage this week of the proposed XM-Sirius satellite radio merger. Of course the approval process will be fraught with all kinds of posturing and inside-the-beltway politicking, none of which I am qualified to comment on.

But what I CAN say is that this is expensive technology, for which there are already viable alternatives. A big debate about these 2 companies truly misses the point about where digital subscription radio is headed. For whatever reason it's an industry that attracts an outsized share of the media spotlight (I think related to the Apollo-era space exploration fantasies of 40 and 50-something male journalists). Anyways, regulators really should just step out of the way!

It's not that the sat radio services aren't any good --I've been a happy XM customer in Canada for the last year. It works well, and delivers solid value (albeit one I would classify as a luxury good). The overall brands of Sirius and XM are of a high quality, and just as importantly they are building meaningful sub-brands (ie the 100 or so channels themselves). Along with customer relationships (ie people willing to pay a premium for commercial free audio content), these are what will retain value in years to come. The satellites themselves will be of marginal significance in the overall digital subscription radio business.

Why you ask? Well think about the competition from ever-popular web radio (programming + brands) combined with mobile phone data networks (billing relationships with customers). In terms of the distribution, today's digital coverage is already quite good in North America, and will only get better. Take for one example Verizon's Wireless Network (choose a heartland state, like say Ohio).

Oh alright there are still rural areas which don't have service, but ONE specialized satellite provider will be able to cover those potential customers for decades to come. For 95% of the population, the mobile phone companies will have coverage AND a strong interest in providing subscription-based entertainment and information services.

In Canada Telus Mobility and XM Radio have been notably ahead of the curve in providing just such a service. XM provides branded channels and music programming, and Telus moves the data (I understand a company called MSpot also provides some infrastructure). I've used this service, and while it has its warts (not enough channels, and too many dropped signals), it points to the way of the future. When you consider the massive investment being made to increase network capacity for purposes of streaming TELEVISION to mobile phones (see MediaFLO and DVB-H), you know that the ground-based data networks will more than suffice to deliver high-quality audio.

So anyways -- no one should get hung up on the disappearance of one satellite radio player. There will be more than enough competition from a variety of players using far more sustainable technology. And that's without even getting started on the iPod alternative ....