Sirius FM-5 (Radiosat 5) Set To Sound Off

Sirius FM-5 satellite logo Following the delivery, on May 22nd, of the Proton M booster rocket designated for the SIRIUS FM-5 launch, the aforementioned spacecraft was delivered to the Baikonur Cosmodrome on May 26th.

After passing through customs, the spacecraft was transferred to building 92A-50 for testing and integration. The satellite, built by Space Systems/Loral on the 1300 bus for SIRIUS XM Radio, is scheduled to be the fifth Proton launch of 2009 and the third ILS mission of the year. SIRIUS FM-5 will be inserted into a geostationary orbit and will supplement the existing fleet of SIRIUS satellites.

Space Systems/Loral (SS/L) announced in June 2006 that it has been chosen by Sirius Satellite Radio Inc. to build Sirius FM-5, a powerful new geostationary satellite for use in its satellite radio service. Sirius FM-5 will carry an X-band uplink and S-band downlink payload. The satellite will be one of the most powerful ever constructed, with end-of-life power capability at more than 20 kilowatts. Sirius FM-5 is based on SS/L's flight proven and reliable LS-1300 platform and will have a specified service life of 15 years. It will carry a range of technologies, including a 9-meter unfurlable reflector, which will allow for highly-concentrated transmissions to small, advanced devices.

As part of its commitment to Sirius, Loral has agreed to provide to Sirius a vendor financing facility of up to $100 million. The satellite will supplement from its geostationary position the three other Sirius satellites in highly elliptical orbits, all manufactured by SS/L.

Recession killed the radio star

The radio business has been struggling lately, to say the least. Traditional, terrestrial radio hasn't found a way to successfully box out competition from Sirius XM Satellite Radio (NASDAQ: SIRI), internet streaming radio, iPods, and other sources.

Plus fewer people are in their cars driving to work lately, so the ratings numbers are down. Not to mention the monotonous nature of much of today's music (or maybe I'm just old . . . get off my lawn, you Jonas Brothers, you!) It's no surprise, then, that the radio advertising business recently saw its worst quarter in history.

The Radio Advertising Bureau said yesterday that combined national and local ad spending dropped 26% to $2.8 billion during the last quarter. Network radio dropped 13% to $238 million while off-air revenue receded 12% to $264 million. The one silver lining was digital platforms (online, streaming, and HD Radio), which collectively saw revenue jump 13% to $101 million. Bottom-lining the numbers to reflect all segments of the traditional radio business, revenue dropped 24% to $3.4 billion during the latest reporting period.

Why The iPhone Won't Save Sirius XM

Like many media companies, Sirius XM (SIRI) is hoping Apple's (AAPL) iPhone can provide a new growth market. That is why it is working on an iPhone app, due sometime this spring. But being the umpteenth radio app on the iPhone -- with a monthly fee -- is not going to be the satellite radio company's savior.

Why not? The same reasons we listed last summer when word of a Sirius iPhone application first reared its head.

1. The iPhone -- and any cellphone -- is hardly an ideal device for listening to the radio in your car, where Sirius shines. After you figure out how to hook it up to your car stereo system, relying on AT&T's cellphone network signal to reliably deliver an uninterrupted
audio stream could be a losing proposition.

2. Besides Howard Stern, there is not much unique Sirius content worth paying for to listen to on your iPhone that you can't get from other radio sources. An 80s station is an 80s station, no matter the source. (Even Sirius XM partner Major League Baseball will be offering its own live radio feeds of games this year via its iPhone app.)

3. There is plenty of other ways to listen to music on the iPhone that don't require a subscription fee, including its built-in library (now with over-the-air downloads), and free apps from Pandora, Last.fm, AOL/CBS radio, etc.

Cellphone owners have been able to stream satellite radio content for years, and that hasn't done much for Sirius or its former rival XM.

Sirius iPhone Application

Sirius announced plans today for an application to stream its satellite radio service to the Apple iPhone and iPod touch. Sirius XM CFO David Frear made the comments on its earnings conference call, which covered Sirius's fourth quarter results. The company reported a fourth quarter net loss of $245.8 million on revenue of $644 million.

Back in 2006, we asked if satellite radio could survive the onslaught of iPods and podcasting. Pods and podcasting threaten the future of satellite radio. A large portion of both companies subscribers has come from people that purchase cars with pre-installed satellite radio. More and more cars have iPod support, which cuts into XM and Sirius subscriber growth. Internet audio in the form of podcasts and streaming audio also offers a free alternative to the services.

Satellite radio's value was based on its coverage and its range of content. At this point, people are overwhelmed by the range of content that's available on the Internet. Devices like the iPhone can bring podcasts and Internet radio to you wherever you take your phone. Is the Sirrius iPhone app too little, too late?

Free Access to Sirius Radio Service

Sirius XM Radio has quietly fixed a bug in its satellite radio system that provided a way for former subscribers to gain free access to the Sirius service since 2002, according to security vendor TippingPoint Technologies. TippingPoint found out about the issue when it was reported to the company's Zero Day Initiative, which pays hackers for technical details on security bugs. TippingPoint relayed its information on the issue to Sirius on July 10.

The situation shines a light on what could become a new problem for the radio network, following the July merger of Sirius and XM: SATELLITE PIRACY. Industry watchers say that with a combined audience of more than 18.5 million Sirius XM subscribers, pirates may now have the incentive they need to create illegal devices that can receive Sirius XM signals. The July 10 problem, which Sirius has apparently now resolved according to TippingPoint, was in the deactivation process used to cancel subscriptions. It seems to be really an oversight on Sirius's side. It's just kind of sloppy, and in the end it really hurts their bottom line. For example, the flaw could have been exploited to build black market satellite radio receivers that would never be deactivated, Forslof said. Although TippingPoint does not know how many people are aware of the issue, the person who reported the bug to TippingPoint said that "multiple people were doing this".

TippingPoint, a division of 3Com, lists the issue on its Web site as having medium severity, but the flaw does not affect the security of Sirius users. Also, it does not affect devices designed to use XM Satellite radio, which was recently acquired by Sirius XM. Sirius XM had little to say about TippingPoint's findings. "Sirius XM does not comment on security issues though we do invest in our technologies to insure our service is protected for our subscribers," the company said in an e-mailed statement. "We are confident in the effectiveness of our technology." It is not clear exactly when Sirius fixed the bug or for how long it was possible to exploit it. Sirius first began offering service under that name in 2002 and the bug apparently existed then.

Piracy already costs the satellite TV industry hundreds of millions of dollars each year, according to Jimmy Schaeffler, chief service officer with The Carmel Group, a digital entertainment consulting firm. With some TV packages priced at close to $100 per month, (Sirius Everything Plus service is $16.99 per month) pirates have focused on satellite TV. However, we view a move to satellite radio piracy as "inevitable," now that Sirius and XM have merged. That's because pirates can now reach a much larger market of nearly 20 million Sirius XM radio subscribers! A pirate can find true value from figuring out how to hack them. A search of online forums turns up anecdotal evidence that some Sirius subscribers may have been able to evade the company's deactivation signals and at least one reference to a cracked Sirius Sportster radio, selling for US$400.

Want HD Radio With That?

Wouldn't it be convenient if all satellite radio—meaning Sirius XM—receivers also handled over-the-air HD Radio? A bill in Congress would mandate this pairing. The Federal Communications Commission is also considering it as an outgrowth of its approval for the Sirius XM merger.

On one level, the requirement makes sense. Haven't AM and FM radio been a happy couple for decades? But it also would mean binding a free medium to a subscription medium, something of a precedent setter. It is easy to imagine satellite listeners, having gotten a taste of free digital radio, letting their subscriptions lapse, especially when times are hard. The National Association of Broadcasters predictably "salutes the leadership" of Rep. Edward Markey (D-MA), who introduced the legislation in the House of Representatives. Lining up in support are Clear Channel, public radio, and Ibiquity, developer of HD Radio.

Not so enthusiastic are the satellite broadcasters. Lining up in their support are Toyota and General Motors, which build satellite radios into their cars, but don't favor this "unprecedented requirement regulating the choice of entertainment technologies in an automotive environment." When it approved the Sirius XM merger, the FCC also approved an open-device requirement for satellite radio. That conceivably could mean accommodating HD Radio, but then again, the extra device could also be internet radio or an iPod dock.

XM vs. Sirius Satellite Radio

Coke vs. Pepsi, McDonalds vs. Burger King, Yankees vs. Red Sox are all examples of some of the most well known rivalries in American culture. Is it time to add XM vs. Sirius to this list? Well, the significance of this rivalry is certainly up for debate, however there is no arguing that it has been bitter battle to this point.



I am of course talking about the satellite radio space, where subscribers receive hundreds of programming options with CD quality reception all across the country. XM and Sirius have many similarities, such as programming and hardware options, making it difficult for consumers to decide between the two. If you’re a Howard Stern junky or addicted to the NFL then Sirius is likely your choice. If Oprah is more your speed or you can’t miss an MLB game then XM Radio is the better choice for you.

So who is winning the satellite radio battle in terms of market share? Well, currently XM has 7.1 million subscribers to Sirius’s 5.1 million. But, who will be winning after the holiday season and into next year? The number of people visiting both Sirius.com and XMRadio.com can be used as a proxy for the future market share of each product. Historically, each site has received similar amounts of people per month, indicating an equal level of consumer interest in both brands. Interesting to note, last month, at the height of the 2006 Holiday shopping season XM and Sirius experienced their largest differential in site traffic ever! While XM skyrocketed past the 1.4 million mark, Sirius hovered to 1.1 million.

When Sirius signed Howard Stern as their marquee radio personality in 2004 they did so with the expectation that he would boost subscriber numbers and thus gain market share on XM. While the signing of Stern definitely increased subscribers, it is clear now, 2 years later, that XM remains the industry leader. With 2 million more subscribers and 350,000 more people visiting their site in November, 2006, it appears the XM’s number one status is secure.

Mitsubishi cuts deal with SIRIUS Satellite Radio

Mitsubishi Motors North America announced that it will offer SIRIUS radio as a standard feature or factory option, starting with four models this fall, and expanding to the full Mitsubishi product line next year. All SIRIUS-equipped vehicles will include a pre-paid six month subscription.

The first models to come standard with SIRIUS will be the 2007 Galant RALLIART, and the Endeavor SE, as well as the Raider LS and DuroCross double-cab pickups.

Other automakers exclusively partnered with SIRIUS include Aston Martin, Audi, BMW and Chrysler, among others.

Sirius radio over Wi-Fi networks

Sirius has recently registered the trademark Stiletto. Which we expect to coincide with their supposed next portable device. It is made from Zing and actually only delivers radio over Wi-Fi networks (an improvement over the S50 but not a solution just yet). The name Stiletto, seems to sound like a high fashion device, and makes sense to be ‘worn.’

Sirius is getting around to releasing a portable/wearable device that will receive live radio broadcasts, to compete with the XM Inno and Helix. Pictured above is the Bluetooth and Wi-Fi enabled Zing prototype shown at D4. These “Wi-Fi Radios” have the ability to share music among friends, download music and upload data, and features a Buy Button (via Yahoo). There’s also push-to-talk functionality via a Wi-Fi network as the device has a built-in speaker and microphone. This device will be able to stream Sirius over Wi-Fi not Satellite, bringing us closer to live radio but not there yet.