Have You Noticed It's Costly To Run A Bunch Of Satellites? XM Has...

from the ain't-so-easy dept

From the very beginning of satellite radio, I was skeptical of its potential. While I admit I was wrong about the number of people it would appeal to, my bigger issue was with the cost structure of the business. Launching and maintaining satellite is extremely expensive. Just ask anyone who worked on Iridium or Teledesic. Even if you can sign up a lot of users, the capital costs are tremendous. If the costs of getting those subscribers is high, then it's a definite recipe for trouble. So far, Sirius and XM have been able to keep kicking, mainly through a ton of investment money and the promise of future potential profits -- stacked up against continued losses. It looks like a few are finally doing the math on all of this and realizing that the satellite radio business, as much as some people like it, may not be sustainable. XM posted wider than expected losses today, blaming higher than expected customer acquisition fees -- suggesting that, for all the good press, not as many people as expected have been rushing to sign up. Also, one of the company's directors resigned, citing a "crisis on the horizon," which is anything but inspiring.

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  1. identicon
    TJ, 16 Feb 2006 @ 5:46pm

    Too many limitations

    I bought a new car not long ago, and the option to add Sirius sat radio was almost nothing at less than $200, which included the first year of service. I liked the idea of fairly random playlists of commercial-free music in whatever genre I would be in the mood for at any given time. I still didn't order it.

    The reason was limitations. After the first year I'd be spending more than $10 a month in service fees. So for that I could buy (at extra cost) a home Sirius receiver which I could add to my same account for either no fee or a small added monthly fee, right? Wrong... add another receiver, and see a big jump in monthly service fees, despite the fact I would never use both receivers at the same time. Also, people who have sat radio have told me it cuts out at times due to interference. If there were a buffering capability that allowed a way to minimize noticable disruptions and also allow repeating a song, pausing, etc. the service would be more attractive. XM I think had talked about adding TiVo-like features to a sat receiver and the RIAA freaked. I'd rather not buy into another 'piracy' fight. And if I were a fan of a talk show like Stern I'd expect the ability to record it for later playback at a time that is convenient for me.

    Lacking convenience, I'll stick to the 6-disc CD changer in the car, and almost limitless MP3 playback at home/work. This Spring a more convenient iPod adapter will be available for my car, at which time I'll have gigabytes of MP3s for easy playback in the car too.

    Pay more than $100 a year for radio in the car that I can't control in any way except change channels, and can't enjoy anywhere except in the car? Phhht! How last century. If XM and Sirius want to grow their subscriber bases enough to stay in business, they need to make their services far more attractive, not limit their usefulness and convenience.

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