The price cap that determined Sirius XM’s monthly subscription rate has expired after three years and the FCC has chosen not to extend it. We’ve reported that the satellite radio company has wanted to increase its subscription rates.
The $12.95 monthy cap was a condition of the FCC’s approval of the merger of the two satellite radio companies in 2008.
The agency sought public comment on whether the cap should be extended, changed or lifted. The combined Sirius XM had asked the commission to let the cap expire, saying market forces have changed since 2008, most notably that it was “faces intense competition from an array of services including AM/FM radio, HD Radio, and iPods,” as well as smartphone applications that permit consumers to stream Internet-based music services [like Pandora Media] while mobile, including in their automobiles.”
Other examples of apps that have emerged as alternatives since the merger was approved include Rhapsody, Slacker, Last.fm, and iheartradio. Ford, Toyota, Mini, GM, Mercedes-Benz, and Hyundai are introducing Internet-based streaming services in their vehicles, notes the Media Bureau in its decision.
HD Radio use has also grown Dec. 2008, when six automobile manufacturers offered HD Radio receivers on a limited number of models, and most as optional equipment, iBiquity Digital told the FCC. By the end of 2011, OEM HD Radios are expected to be factory-installed as standard or optional equipment on 109 vehicle models from 17 vehicle brands, compared to 53 vehicle models in 2009, and 80 vehicle models at the end of 2010, cited the FCC from industry reports.
No one submitted proposals to extend the price cap, or evidence that it’s necessary to keep the limit. On the contrary, most commenters said the cap should be lifted and Sirius XM should be able to set their subscription prices according to market forces. Some of the consumers who opposed extending the price cap are also Sirius XM investors, noted the commission, which said it couldn’t justify extending the limit beyond July 28.
— Leslie Stimson
