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Shareholder Fumes About Interoperability

What exactly is an interoperable radio for satellite radio and why isn’t it on the market already?

What exactly is an interoperable radio for satellite radio and why isn’t it on the market already?

Michael Hartleib, a Sirius shareholder and real estate agent from Laguna Beach, Calif., wants to know.

He filed a Petition for Declaratory Ruling with the FCC to get the agency to define exactly what it intended when it specified the satellite radio services would develop an interoperable radio. He’d prefer a ruling before the merger review is completed.

Hartleib wouldn’t tell me exactly how many shares he has, but he said he has spent about 1,000 hours in researching the issue.

“Shareholders have lost billions of dollars as these two companies continue to battle over exclusive content,” he said in the petition. When he and others invested in the sector, Hartleib stated, the investors knew an interoperable radio would level the playing field, and eventually the company with the most compelling content would win. Shareholders “would be rewarded, and consumers would have the choice the mandate was supposed to grant them.”

The satellite radio companies say they have developed an interoperable radio; Sirius CEO Mel Karmazin told a congressional committee earlier this year he has such a unit in his office but that at $700 a pop, no one wants to manufacture it. If the satellite radio merger goes through, a unit that can receive the signals of both companies would be available approximately within a year of merger approval, the companies have said. Mel didn’t say why a merger would mean that suppliers could then make such a unit more cost effectively; presumably efficiencies related to the merger are called into play here.

I would observe that tech investments are risky, and it’s not the FCC’s fault this situation developed. But while I think Hartleib logic is a little fuzzy in some aspects of this issue, I agree it would be a good thing to shine a light on what’s been developed and how it would work.

The commission, of course, can’t comment on a pending merger.