As the XM-Sirius merger slogs it’s way through the regulatory process, the Washington Post reports that satellite radio is facing competition from a new source:
When Hyundai introduces its still-unnamed premium sports sedan for 2008, it will arrive with a built-in feature that most other new cars won’t have: high-definition radio.
Over the past few months, high-definition radio technology, which delivers clearer and crisper sound for over-the-air radio, has made inroads into the new-car market, a major battleground for audio entertainment. Hyundai, Jaguar and BMW are among the automakers that have installed the required special receivers into their cars.
The retailers Best Buy and Wal-Mart in March said they would carry high-definition equipment in their stores. In May, broadcast companies launched stations in the updated format in the nation’s top 100 markets.
HD radio’s recent announcements could be noteworthy as XM Satellite Radio and Sirius Satellite Radio continue to lobby the government to approve their planned merger.
Executives of the country’s two satellite radio companies point to HD radio, Internet radio and in-car iPod accessories as their competitors. Regulators are keenly interested in looking at the competitive landscape for radio, particularly in the car, where many satellite radio systems are installed. None of those technologies were around a decade ago when satellite radio was created, proponents of the merger have argued.
While HD has nowhere near the subscriber base that XM and Sirius have, that could change quickly if the receivers become more easily available, especially since, unlike satellite radio, HD radio is free:
HD radio, unlike its satellite counterpart, broadcasts over traditional airwaves and charges no monthly subscription fee, a feature the industry is promoting as part of its $250 million marketing and advertising campaign.
The monthly fee charged by the satellite companies could put them at a disadvantage if consumers begin to choose between the two options, said Rob Enderle, principal analyst at Enderle Group.
“Free tends to trump fee in almost every market,” he said. “I think the argument for XM and Sirius is that if they don’t merge, they’ll probably go away.”
Which is exactly the reason this merger should be approved.