Jacobs Media's latest Technology Poll shows that cell phone usage not only dominates American culture, but that it's considered primarily as a communication device and not an entertainment device. Yes, an obvious conclusion, but interesting to see the numbers...

 

Note where "Listening to MP3s" places in comparison to all the other mobile phone features. This doesn't necessarily indicate consumer's desire to listen to music over the cellphones - just what they are currently using on their cellphones.

What might that mean? That the experience of mobile audio just isn't satisfactory yet. A recent Arbitron study indicated that mobile audio is a massive growth opportunity for broadcasters, and it most likely is.

But right now, the over-the-air mobile audio experience, well... sucks. The interfaces are awkward, you need to know what you want before you can listen to it, and it's more difficult than it's worth. Especially when there's an alternative sitting next to you that you already spent $400 on (yes, the iPod). There's a growth opportunity here alright, and that's in streamlining the experience. (Side note: I really really hope that XM is trying their darnedest to utilize their relationship with Cingular to get XM Radio Mobile into the iPhone.)

Now here's another bit of data that is unsurprising:

 

Given the choice of TV, the Internet, Cell Phones or FM Radio, which do you think most people could live without? FM Radio is the obvious loser in that equation. But consider why?

Gone are the days of radio as the sole purveyor of information to the masses - an argument that preserving terrestrial's monopoly on "localism" is not in the public interest. Or maybe more accurately, the "localism" argument is a moot one, since most radio isn't even "local" at all (and therefore, not a necessity to consumers anymore).

[Jacobs Media Tech Survey III] 

Unsurprisingly, the Independent Spanish Broadcasters Association (ISBA) has joined up with their brethren, the NAB, to come out against the Sirius-XM merger.

Zee Ferrufino, a member of the ISBA board and the owner of KBNO 1280 AM in Denver, said, "Anything that's a monopoly will affect everybody. Not only Spanish broadcasters but any radio station."

And what of the chances of the merger going through?

"They are crazy," Ferrufino told The Denver Post. "I don't believe this is going to happen. Most people are against it."

[The Denver Post] 

As of today, Clear Channel Communications station 92.5 KZPS FM will no longer run traditional spot advertisements. Instead, they're trying something completely different in an attempt to compete with other commercial-free alternatives like satellite radio and iPods.

Instead of the regular 30 or 60-second spots, advertisers can now sponsor an hour of programming during which the DJ will promote a product conversationally in what Clear Channel calls "integration."

This integration technique will account for about two minutes of chatty product-placement throughout the hour, as opposed to the regular 12 to 16 minutes of commercials that most stations broadcast each hour. Advertisers will not just have the hour to themselves, but also their own unique categories. For example, Southwest Airlines, AT&T, Coors Brewing and Guitar Center; all will enjoy product placementwithout competing sponsorship from other airlines, phone companies, breweries or musical instrument stores on that station.

Whether or not the technique works is still unknown. In 2005, three stations on Long Island experimented with a similar model but eventually returned to conventional commercials. Either way, this indicates that Clear Channel is seeing commercial-free audio sources has competitive threats, and is experimenting with their own competitive response.

As they should, because according to Arbitron KZPS slipped to 17th place in the fall of 2006, from 7th in the fall of 2000 when Clear Channel acquired it.

"People are not as willing to listen to the commercials, and soon we’ll have the Internet streaming directly into cars," said Robert Unmacht, a Nashville-based radio consultant.

Thankfully, Clear Channel has over 1,100 stations nationwide that they can experiment with.

[New York Times]

With the CBS takeover rumor surprisingly still keeping warm, let's look at this from a theoretical standpoint. What if the timing is off? Maybe, like with most rumors, the overall concept is there but it loses out in the details?

Forget about a takeover while this merger process is underway, that would be too messy, but what if the merger is not approved? Sure, both companies have said that they would survive just fine without a merger, but we all know what would happen if it doesn't go through: the stocks would take a nose dive (more so than the already baked-in assumption by the Street that it won't happen).

So why wouldn't the merger be approved? Because regulators would buy the "satellite is its own little market" argument. And in turn there wouldn't be much in media ownership issues. If satellite radio is its own separate market, there's little in the way of a terrestrial radio company (any terrestrial company for that matter) scooping up one of the satcasters for itself.

Food for thought.

We all know of the NAB's vehement opposition to satellite radio, not just against the Sirius-XM merger, but against the entire industry in general. But is this opposition limited to just satellite radio? Or has the NAB opposed other technologies? So glad you asked... read on!

For actually over twenty-five years, the NAB has objected to the evolution of communications technology. This includes satellite television, "drop in" radio stations, low-power radio and low-power TV band devices.

So what makes satellite radio different?  Opposition to the Sirius-XM merger is simply the latest and greatest in the NAB’s persistent resistance to change. Let's take a look at the evidence...

Satellite Television
In the 1980s, the NAB fought the FCC's decision to award DBS licenses, claiming that the Communications Act forbade a nationwide licensee. The NAB's position was so extreme that a federal appeals court described the NAB as "luddite[s]," saying it would be irresponsible to deny consumers "new technology that offers the promise of substantial public benefit." The court also chided terrestrial broadcasters, commenting that "the Act does not entrench any particular system of broadcasting: existing systems, like existing licensees, have no entitlement that permits them to deflect competitive pressure from innovative and effective technology."
(NAB v. FCC, 790 F.2d 1190, 1197-98 – D.C. Cir., 1984)

"Drop-In" Stations
In the 1980s, the FCC issued a decision allowing the allotment of additional FM frequencies. The NAB and other broadcasters sought to have restrictions imposed on the operation of these so-called "drop-in" FM stations, which were made possible by technological improvements in radio receivers. The NAB also filed a petition for reconsideration of the FCC's decision to authorize the new stations.
(Modification of FM Broadcast Station Rules to Increase the Availability of Commercial FM Broadcast Assignments, 87 F.C.C. 2d 279, 1984.)

Low-Power Radio
The FCC first proposed the establishment of rules for low power radio service in 1999. The NAB and other broadcasters submitted comments vehemently opposing this new service. The then-FCC Chairman William Kennard said this opposition was "about the haves—the broadcast industry—trying to prevent the have-nots—small community and educational organizations—from having just a little piece of the pie. Just a little piece of the airwaves which belong to all of the people."
(Statement of FCC Chairman William E. Kennard on Low Power FM Radio Initiative, 2000 FCC Lexis 1536 – March 27, 2000)

Low-Power TV Band Devices
In 2004, the FCC proposed to allow certain types of unlicensed devices to operate in the broadcast television spectrum at locations where the spectrum is not being used. As the Commission explained, permitting such operations would enable "more efficient and effective use of the TV spectrum and would have significant benefits for the public by allowing the development of new and innovative types" of broadband devices. The NAB and other broadcast interests sought to impede the operation of these new devices, though they would operate only on channels not being used for licensed services. Even after the FCC issued a decision in 2006 authorizing the devices, the NAB and other broadcast interests asked FCC to impose an extensive set of restrictions on the operation of the devices.
(Unlicensed Operation in the TV Broadcast Bands; Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band, 19 FCC Rcd 10018 – 2004)
(See Joint Comments of The Association for Maximum Service Telelvision, Inc. and the National Association of Broadcasters, ET Docket Nos. 04-186 and 02-380 - filed Jan. 31, 2007)

Satellite Radio
From the start, the NAB vehemently opposed allocation of spectrum for and licensing of satellite radio, asserting that it would destroy local radio broadcasting. The radio industry’s evidence was embarrassingly thin ranging from studies that assumed satellite radios would be free, claiming that a temporary revenue fall-off during a recession was indicative of the declining fortunes of terrestrial broadcasters, to a survey of radio station executives, each of whom claimed that satellite radio would be the death of localism. Ultimately, NAB’s opposition delayed licensing satellite radio for seven years. Now the organization is looking to stop the Sirius-XM merger from going through, using any means necessary.
(Rules and Policies for the Digital Audio Radio Satellite Service, 12 FCC Rcd 5754, ¶ 19 - 1997)
(Reply Comments of CD Radio, at 29 - filed Oct. 13, 1995)

The NAB's public opposition to the Sirius-XM merger is an effort to advance its members' interests. Period. This has nothing to do with serving the greater good. It has nothing to do with the public interest. The NAB is in business to advocate for their members, and that's all.

The NAB's opposition to the merger is not indicative of the value of the merger itself. Rather it's symptomatic of the NAB's self-interest and consequent hostility toward new technology.

In an incredibly descriptive article entitled Dinosaurs vs. Satellites, senior editor Radley Balko paints a clear picture of the NAB's efforts to undermine the satellite radio industry.

From their consistent flip-flops in defining competition, to anti-satellite radio advertising (which, miraculously, has disappears from their website) to vehement protection of "localism" - we see the true colors of the NAB through this article.

One interesting thing I didn't know: "... the NAB lets members of Congress and their families record public service announcements in NAB studios free of charge. The commercials are then broadcast in the members districts on NAB stations, also free of charge. That's broadcast time politicians often have to pay thousands of dollars to reserve."

Wow.

[Reason Magazine] 

When NAB President and CEO David K. Rehr delivered his opening keynote address at NAB2007 in Las Vegas yesterday, he unsurprisingly used the opportunity to voice the NAB's adamant opposition to the Sirius-XM merger. Rehr said the merger "certainly would not be in the consumer's benefit," adding his view that "this is not about the consumer. It is not about advancing technology. It is about lining the pockets of financiers and corporate executives."

So let's take a look at the NAB's long history of lobbying in Washington against the development of satellite radio. Afterall, this is an organization that is so concerned with the advancement of technology, the benefits of the consumer - and at same time, not concerned with the lining of one's pockets. Surely then they wouldn't try to stifle open competition from satellite radio right?

The reality is that for more than 25 years, the NAB has objected to the evolution of communications technology, including satellite television, "drop in" radio stations, low-power radio and low-power TV band devices... all in addition to their opposition to satellite radio.

Their latest effort to block the merger of Sirius and XM is actually only part of a massive multimillion dollar effort that began 17  years ago. Below is a timeline of the NAB's efforts against satellite radio, long before a single satellite was even launched:

1990: The NAB tried to make end run around government plans to create a satellite system by proposing a digital system using land-based radios.
1992: The NAB mobilized opposition to the FCC’s proposal to set aside spectrum for satellite radio.
1994: The NAB submitted a filing to the FCC opposing any licenses to operate satellite radio technology.
1995: The NAB filed a report with the FCC and mounted a publicity campaign warning that satellite radio “will fragment radio audiences and make local radio unprofitable.”
1997: The NAB paid Kagan Consulting to produce an “independent report” claiming that FM radio would suffer great financial harm from satellite radio.

The NAB’s efforts to stop satellite radio failed. That, however, didn't stop their opposition.

At the heart of NAB’s argument is the claim that the merger is anti-competitive. But to me, the best validation of the true competition in the audio marketplace is the fierce response that the NAB has had to the Sirius-XM merger proposal. Understand this: The NAB is not motivated by serving the greater good. They are in business to advocate for their members.

The NAB knows that Sirius and XM compete with over 10,000 free radio stations in the country. The NAB (and its members in numerous SEC filings), have admitted it:

• Last September, in his remarks to the NAB Radio Show in Dallas, Texas, NAB President and CEO David Rehr declared, “In 2006, we have satellite and internet radio [as competitors]. And barely a day passes without the introduction of a new competing device or service. But we have news for our competitors: ‘We will beat you – as we have beaten those change agents in the past.’ ”
• The NAB in October 2006 provided media ownership comments to the FCC seeking relaxation of radio ownership regulations (how ironic?) and cited satellite radio and other competitors as justification.
• That same month at the National Press Club, the NAB’s President and CEO, David Rehr, cited satellite radio as one of AM/FM’s competitors.  

But as soon as the merger was announced, the NAB embarked on a non-stop campaign to distract regulators and consumers from the facts surrounding the proposed Sirius-XM merger:

• Washington guns for hire...
  
  The NAB has used its money for any Washington hired guns it could find, notably John Ashcroft. The Wall Street Journal reported that "Former Attorney General John Ashcroft, who sent a letter…to his successor Alberto Gonzales blasting the proposed merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., approached XM in the days after the merger was announced offering the firm his consulting services." The NAB has since hired James C. Miller and Philip M. Napoli to send their own "independent" letters of opposition.
  
  
  
• And the verdict from the Carmel Group is...
  The NAB also paid the Carmel Group, a California consulting firm, to change its views about competition in the audio entertainment market. In an article written a year-and-a-half ago, before being hired by NAB, Carmel’s Jimmy Schaeffler described satellite radio’s competitors as "traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle." Yet, after receiving funds from the NAB, Mr. Schaeffler produced a white paper saying exactly the opposite.
  
  
• The best funded college student group I know...
  On February 28th, Corporate Crime Reporter uncovered the real story about the Consumer Coalition for Competition in Satellite Radio (C3SR), a group of law students opposed to the XM-Sirius merger. C3SR claimed to be an independent grassroots consumer organization and refused to say who funded it. But admitted to being "supported" by the NAB. And is able to afford commissioning reports (which reportedly can cost upwards of $400/hour) by Gregory Sidak of Criterion Economics.
  
  
• Legislators legislating on their own behalf...
  Mike Hubbard, Alabama's House Minority Leader, was the lead sponsor of a non-binding resolution against the merger of Sirius and XM, which was passed by the Alabama House of Representatives on March 29th. Interestingly, Hubbard is a member of the Alabama Broadcasters Association who owns a terrestrial radio station and an audio production company serving the national broadcast industry.

And, of course, their rhetoric has changed. NAB President Rehr now claims that satellite radio doesn't compete with AM and FM radio.

Now the competition is "one way" (how convenient), and the $20 billion radio industry will face unfair competition from a combined Sirius-XM (which together have a mere 3.4% of total radio listening, according to a recent Arbitron survey).

NAB members like Clear Channel claim that a merged satellite radio company would unfairly hurt "local" radio (imagine that, Clear Channel is now "local"). Of course, Clear Channel Communications is well diversified and is working to provide nationwide mutlichannel audio content for HD Radio stations, mobile wireless audio providers and more. Don't believe me? Just listen for yourself.

The harder the NAB works to quash competition, the easier it is to see their hypocrisy. "Words have consequences," Rehr said in his keynote yesterday. So true.

Terrestrial Radio:

• AM/FM radio is offered free of charge to all consumers and comes as a standard feature in virtually every vehicle, home stereo, and clock radio sold to U.S. consumers.
• Nearly 14,000 radio stations exist nationwide.
• Approximately 230 million Americans choose to listen to terrestrial radio each week.
  

HD Radio:

• Over 1,200 HD Radio stations broadcasting across the nation.
• Recent FCC decision allows radio broadcasters to provide HD Radio subscription services on an experimental basis. This allows HD Radio to compete not only for listening time, but also for subscription dollars.
• HD Digital Radio Alliance—a consortium of broadcasters including Clear Channel Communications, CBS, and ABC Radio—the terrestrial radio industry has committed hundreds of millions of dollars to promoting this technology. 

Internet Radio:

• 2006 Arbitron study found that weekly listenership is up 50% in one year, and now approaches 1-in-5 Americans among key demographic segments.
• Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world.
• Mobility coming soon. For example: Slacker will allow users to listen on a portable devices, including in their cars.
• Various Internet radio offerings are already available on mobile phones, and Internet radio is expected to become widely available on portable devices, including car radios, by 2008. 

iPods and Other MP3 Players:

• More than 116 million MP3 players have been sold.
• A variety of accessories available to play MP3 players in cars, through the vehicle’s FM radio or tape deck.
• Apple has teamed with Ford, General Motors, and Mazda to provide iPod integration in more than 70 percent of 2007-model US automobiles.

Mobile Phones:

• Approximately 75 percent of all Americans currently own a mobile phone.
• Several major carriers are now offering audio entertainment options (e.g., Sprint, AT&T, Verizon Wireless)
• Approximately 23.5 million wireless subscribers currently own phones with integrated music players.
• AT&T and Apple make the Apple iPhone available for sale this summer.

Adding to the above, there's a number of other companies have announced plans to deliver broadcast audio and video content through mobile phones and other wireless devices. Three companies - MediaFLO USA, HiWire, and Modeo - have acquired nationwide or near-nationwide spectrum to deliver audio/video content through existing wireless service providers and are in the process of implementing, testing, and launching service. A joint venture of Sprint and several cable companies is implementing a similar mobile entertainment platform.

Here's a key takeaway: products need not be identical, to be substitutable. If they are substitutable, then consumers have a choice.

Clear Channel (CCU), by far one of the largest radio broadcasters in the country, has sent FCC Commissioner Deborah Tate several follow up responses from her meeting with the TAB.

According to the ex parte communication, Commissioner Tate questioned how Clear Channel can recognize and cite competition from other audio sources (iPods, Internet Radio, etc) as a reason for relaxing consolidation rules - while at the same time call the Sirius-XM merger a monopoly.

Conveniently, Clear Channel Vice President Thomas English gives three separate answers to this question. Here's a quick summary of his positions:

1. A combined Sirius-XM would "distort" the marketplace because it would concentrate the spectrum, while local radio ownership rules would unfairly restrict terrestrial.
2. How could free radio survive? Sirius-XM would have 100% spectrum, and local broadcasters can't compete against that.
3. Free radio serves the public interest, and he opposes anything that would affect that regardless of how the market is defined.

It's funny to see Clear Channel actually positioning itself as "the little guy" in this endeavor, promoting "local radio" or claiming that free radio would have "trouble" surviving. Truly amusing. Especially on the heals of Clear Channel partnering with Google for ad distribution across 675 of its radio stations, and the industry as a whole pulls in over $20 billion (that's with a "b") a year.

Commissioner Tate has traditionally promoted less regulation in the evolving communications marketplace.

Testifying in February to the Senate Commerce Committee, Tate said, "XM and Sirius have signed up millions of satellite radio subscribers, and iPods and other digital music players are used by millions more, including one in five people under the age of 30; and our mobile phones now provide us with stock quotes and e-mail updates from sources across the globe. We must make sure that we account for these effects of the digital age, because, from a regulatory standpoint, the media marketplace of tomorrow is being shaped by our actions today."

[FCC Filing (PDF) via Public Integrity] 

Imus, 66, was among the most recognizable voices on radio, and had an estimated salary of approximately $10 million a year. According to the New York Times, he recently signed a five-year contract extension.

So should he reach some sort of an arrangement with CBS Radio, should Imus make the move to XM or Sirius? Cast your vote below.