SIRIUS' EVP/CFO, David Frear, today at the Bernstein Strategic Decisions Conference confirmed that all SIRIUS Satellite Radio receivers are in full FCC compliance. Some letters were sent regarding some Sirius devices that were out of spec. Frear stated that they then went to the receiver manufacturers and took care of the problem a while ago.

All SIRIUS Radios are in full FCC compliance. Case closed.

Thanks Tim! 

This according to Forbes after BofA Analyst Jonathan Jacoby wrote in today's research note:

"The FCC issue could be more pervasive than previously believed. We believe that XM and Sirius could temporarily suspend retail shipments of certain radios, but the fix would be relatively quick and inexpensive and likely would not lead to stock-outs at retail."

According to Jacoby, the simple addition of a 25-cent part could put the receivers back into FCC compliance and a new product could begin shipping again within 30 to 60 days. "If that is the case, we believe the retail channel would remain sufficiently stocked to maintain a normal level of unit sales -- and sub numbers would not be impacted," he said.
 

[Forbes] 

Earlier today word came in that XM has stopped selling certain radio from their kiosks and from their online store. As further investigation showed that only satellite radio receivers with an FM-Modulator were the units being pulled. On XM's Online Store, most units were listed as "Out of Stock" with the exception of the Pioneer Inno.

Then Ryan from XM Fan made the said the following:

"official word from XM is they voluntarily stopped selling the radios with the wireless FM mod at their kiosks and online store until the FCC gives them a decision. This info is from a director of retail marketing at XM.

This is their company decision regarding their own stores, and does not affect radio sales at any other stores."

No doubt this is relating to FCC probes into the FM transmitter emission levels, which even went to far as to cause Audiovox to halt shipments of the Audiovox Xpress plug-and-play receiver.

(Note: at the time of writing this, the XM Online Store appears to be down for "site maintenance" - no word as to whether this is related.)

Thanks Bud and candlebougie!

UPDATE: The reason why the Inno was not pulled is because it has the benefit of allowing firmware updates. Apparently all the latest Inno / Helix receivers are shipping with (if I remember correctly) the v1.10 firmware which disables the FM Modulator when not plugged into the car kit. I believe - and please, correct me if I'm wrong - that v1.09 still as the FM Modulator activated when on-the-go. I can only assume that this is a proactive reaction to the FCC probes.

XM Satellite Radio has reported a change to its subscriber and financial guidance for 2006, projecting that it will end 2006 with 8.5 million subscribers (down from earlier guidance of 9 million), resulting in subscriber revenues of $835 million and an EBITDA loss of $235 million.

XM reaffirmed that it remains on track to have positive cash flow from operations for the fourth quarter of 2006 and on an annual basis for 2007.

Hugh Panero cited "overall softness in retail during the second quarter" as one of the key reasons of this. Perhaps the line of most concern from the press release is this one:

XM is currently working through regulatory and legal challenges, the resolution of which could affect future product availability and operating results, and require us to review this revised guidance. 

Let's hope this is only referring to the Audiovox Xpress. 

This is going to make Gary Parson's session today at the Morgan Stanley Media Conference a little hot under the collar. Unfortunately, neither stock needs any more bad news at this point.

[Press Release] 

Satellite Standard Group points out to us that SIRIUS Satellite Radio is now showing up in Home Depot stores, just in time for Father's Day. Very interesting point of purchase.

At first glimpse you would think that Home Depot is a perfect outlet to appeal to the male demographic. That is until I learned that while 50% of Home Depot sales are made by women, an even higher percentage of sales are being influenced by women.

So while the timing will have some perks, there's definitely some very well thought out long term benefits to this partnership. The fact that the Home Depot sponsored Tony Stewart just signed on board can't be much of a coincidence either.

[Satellite Standard Group]
Thanks Todd!

Dave Zatz got his hands on a new Altec Lansing XM3120 Powered Audio System. It's a nice succinct review and worth checking out if you're in the market for a tabletop for your RoadyXT/Xpress.

Personally I'd like to see more of a push for these tabletop systems from the manufacturers. From a consumer's standpoint, the simplicity of having self-contained speakers + power + antenna setup is a far easier pill to swallow than any Home Dock setup. Hint: instead of including a free Home Dock as a promotion, do more bundles with these tabletops. You'll tap into the 18-24 age demo (perfect for Dads 'n Grads promos).

[Zatz Not Funny] 

Windows Media Player: [Watch Commercial]
QuickTime: [Watch Commercial]

I'm not sure what I feel about the "best radio on radio" tag, but I do like the narrative guy (ala the Verizon Guy) who shows up out of no where. The explaination of the satellites not being so "mysterious" is interesting - attempts to simplify the technology - but I'm not so sure it expresses it directly enough that all viewers will understand that fact. Whatever the campaign message, it's great to see new ad spots again.

Thanks again candlebougie!

Here's some more gory details on the suit against XM Satellite Radio by the Record Industry. This suit does not just affect XM, and not even just SIRIUS indirectly (with their new wearable coming out soon, there's no doubt it will have recording capabilities), but jeapordizes all consumer electronic devices that can receive and record a broadcast of any sort (such as DVRs).

If you would like to view the actual filing, you can access it here (PDF - 33 pages).

Make no mistake, this is an attempt by the RIAA to change XM Radio's music license structure from performance (which terrestrial radio is privvy to) to a distribution license (like iTunes or Napster). In the lawsuit, the RIAA completely ignores the Audio Home Recording Act, even though that is exactly what XM designed the Pioneer Inno and Samsung Helix to be in compliance with. The AHRA specifically gives users of digital audio recorders the right to engage in home taping.

But the RIAA ignores the AHRA here. Why? Because 14 years after the AHRA was passed, the RIAA feels that with our evolving technology the AHRA no longer suits their interests. Hence the backing of The PERFORM Act.

According to several sources, XM offered the RIAA payments similar to the agreement made with Sirius, and in fact offered more compensation. But the RIAA didn't want this because it sets a precidence of a la carte device settlements. Yet another reason why Sirius isn't necessarily out of hot water yet. Should the RIAA be successful with this suit, and let's all hope they're not, they will be able to define the scope of a "distribution" right as any service that transmits and allows the recording of a broadcast. That means that not just satellite radio, but terrestrial radio and internet radio would all be at risk.

Ridiculous.

So what about the alleged damages? We've all heard that the RIAA is seeking $150,000 for EACH song saved by the Inno - but with 160,000 songs played per month - how exactly will the RIAA track these occurances? In the suit, they claim that XM has the capability to track each saved song through the XM+Napster interface. As soon as the Inno is plugged into the computer, it is "believed" that XM can then receive a transmission over the internet indicating that a specific song is saved.

But it doesn't stop there.

Because of the Helix/Inno ability to automatically buffer up to 10 minutes into a broadcast, the RIAA feels that those "recordings" are infringements as well. So XM should pay them for the cached music occurances as well. As the EFF points out, if half the Inno users are simply tuned in to XM's music content (not actively recording mind you, just listening to), the statutory damages would reach $37.5 Billion a year. Yeah... wait, what?! That obviously has no bearing on the "harm suffered" by the RIAA considering they pulled in $12.3 Billion last year.

The Inno does not allow transferring of the music off the device. It even allows you to buy the music you've recorded and protects the music with DRM that deletes the songs if you are no longer an XM subscribers. So how can these only be used for anything other than the facilitation of personal use?

[EFF.org via Public Knowledge]

Walt Mossberg is considered one of the most influencial people in technology. He has the abilities to make or break products by a simple wave of his hand (or something like that). For those not necessarily entrenched in the tech punditry world, Walt Mossberg writes several columns (Personal Technology, Mossberg Solution and Mossberg's Mailbox) for a cute little rag known as The Wall Street Journal. And he's set his sights on the Pioneer Inno.

Overall, Mossberg gives a decent review of the unit. Very detailed and in-depth. Where he really fall short though is on the subject of reception. Here's some key snippets about this:

It's hard to overstate the reception problems that plague the Inno. We lost reception while driving through a short tunnel, walking through a row home and wandering through our office, away from the window. Even in an office with an entire wall of windows, we had to sit right next to the glass to get XM Satellite Radio reception.

Walking around downtown Washington, just a few blocks from the White House and a few miles from XM's headquarters, the Inno constantly dropped the XM signal, even though Washington, by law, has no office buildings taller than about 12 stories. Walking just a few feet into a Starbucks killed the signal altogether. When we sat down on a bench in a small park, the reception got much better, but still wasn't perfect. For a device that's primarily a radio, this is a killer flaw. Of course, you can listen to the Inno's stash of recorded music during these signal dropouts, but, when the failures are as frequent as ours were, this need to keep switching modes turns a supposedly pleasurable experience into a huge annoyance.

It occured to me while reading this that Walt Mossberg doesn't have much experience with satellite radio in general. But then I remember the old WIRED article from May 2004, where Mossberg was profiled and XM was a specific case of his "power" when he criticized XM's units. He later wrote a follow up praising XM for their redesigned units, and in fact saying "And that makes XM Radio a service I can wholeheartedly recommend."

So see, what Mr. Mossberg is trying to do here, is write the review from the expectations of the "average" listener. Not the seasoned geek. And the assumed expectation is that the average Joe Sixpack is going to consider the Pioneer Inno as a regular radio and not a satellite radio.

And I have to admit that indoor reception is the single biggest inherit problem with satellite radio. A problem that the Inno's recording/scheduling features are essentially trying to resolve - short of blanketing the country in repeaters - it's the next best thing. Afterall, people enjoy podcasts just fine (to Mossberg's credit - he doesn't) which are basically scheduled recordings.

What I just wish he would have done is not laid blame on the Inno itself, but rather about satellite radio technology in general.

Oh well, I guess when it rains... it pours. I feel for everyone at The Eck right now.

[Wall Street Journal]
[also available at SSG]

Yesterday the record industry filed suit against XM Satellite Radio for "massive wholesale infringement," caused by the Samsung Helix and Pioneer Inno. The suit seeks $150,000 in "damages" for every song copied by XM customers using the device. How exactly the RIAA intends to track each occurance of a saved song is a mystery. But with 6.5 million subscribers, and approximately 160,000 songs played every month, the potential damages that the RIAA could seek out would be staggering (however no where realistic).

XM issued the following statement to Billboard Radio Monitor:

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades. The music labels are trying to stifle innovation, limit consumer choice and roll back consumers’ rights to record content for their personal use. This is a negotiating tactic on the part of the industry to gain an advantage in our private business discussions. XM Radio is the largest single payer of digital music broadcast royalties, and royalties paid by XM go to the music industry and benefit artists directly. XM will vigorously defend this lawsuit on behalf of consumers."

And the RIAA fired back stating the following:

"Not only are we fans of satellite radio, we consider ourselves partners and we celebrate the industry’s growth," the RIAA said in the statement. "From the outset, we understood the mutual benefits of digital broadcasts. In fact, we provided them with a major price break in our initial licensing agreement to help the industry get off the ground. That agreement has made it possible for satellite radio to grow.

"As we continue to transform our business model, the integrity of the digital marketplace is more important than ever. We want to work with our various partners to offer fans an extraordinary music experience in a variety of different ways, but everyone must play by the same set of rules and fairly compensate labels, artists, songwriters and publishers."

With XM being the biggest single payer of digital music broadcast royalties, they're playing by a very generous set of rules. SIRIUS can't be far behind XM in the amount of royalities they pay either. Both companies are being strongarmed by the RIAA cartel.

Remember that last month SIRIUS settled with the four major music labels (Universal, Warner, Song BMG and EMI Music Group), agreeing to pay an undisclosed amount in 'damages' and cap the production of the Sirius S50.

In a statement to the US Senate over The Perform Act - which essentially is the RIAA's method of bringing Washington into the negotiation - Gary Parsons, Chairman of XM Satellite Radio said, "Recording from the radio is not a download service. Everything recorded from the radio is locked to the device. It cannot be transferred to the Internet ensuring that it is only for personal use."

Back in October 2005, we learned that the RIAA was seeking $1 Billion from both XM and SIRIUS for the new music licensing contracts covering 2007 - 2012. The current $80 Million contract expires this year. Talk about disgusting negotiation tactics. Terrestrial radio, on the otherhand, does not pay a single dime.

[Reuters]
[Billboard Radio Monitor]

Thanks to everyone who sent this in!