[Satellite News 08-28-08] iBiquity Digital Corp., a developer and licenser of HD radio technology, told Satellite News that it will file with the U.S. Federal Communications Commission (FCC) in response to an FCC notice of inquiry (NOI) considering whether or not to require XM Sirius Satellite Radio to include hardware that makes satellite radio receivers compatible with HD terrestrial radio broadcasts.
    The NOI is being sent to satellite radio manufacturers and the public for commentary on whether or not a federal mandate on the matter is necessary. The mandate would reflect the demands and conditions from democratic commissioners Jonathan Adelstein and Michael Copps that were rejected by XM and Sirius prior to the merger being approved.
    A representative from iBiquity said the company would not comment on the content or rationale of the filing because the filing has not been made yet.
    The FCC said they had not received the filing as of Aug. 28 and did not have enough information at this time to comment.

Manufacturers, Analysts Disagree With Possible Mandate
    Commenting on the mandate being considered by the FCC, Richard Stoerger, COO of Audio Design Associates (ADA), a manufacturing partner of Sirius, told Satellite News government regulation in this matter is unnecessary.
    “This kind of mandate is not productive,” said Stoerger. “The market makes its own determination on what the configurations should be and will itself drive HD AM and FM into the market.”
    Stoerger said the mandate would drive up the costs of newer radios because it would require added hardware to all units.
    “I cannot imagine that the mandate of an HD module will benefit the consumer if it means added cost,” said Stoerger. “Besides, we have already been bundling these services for quite some time. This is nothing new for ADA. For the HD radio industry, it is just coming out.”
    Industry analyst Tim Farrar agrees with Stoerger, saying the HD radio market does not need any more help to stay competitive with satellite radio.
    “For any potential subscriber to satellite radio there is a trade-off between whether or not the service is worth it,” said Farrar. “From here on out, satellite radio is a car-based service. HD radio is a technological advancement on a free service. There is already a natural balancing effect in the market and that is one of the key reasons behind the FCC’s rationale to approve the merger.”
    Farrar said that for car manufacturers, customer demand for free HD radio service or satellite radio service would determine what portion of their vehicles they would install either type of unit, making it a fair and competitive market.
    “It is the same transition that we saw when tape players were replaced by CD players. It was driven by customer demand,” said Farrar.
    Speculating on why there would be a push for the mandate, Farrar suggests that it is a reaction to a majority of automobiles currently manufactured with satellite radio.
    “If [HD radio lobbyists] can jump on the back of that and demand that HD radio be in those vehicles before they jump off the production line in a certain period of time, then that will presumably work in their favor. They would like to go over and above the current market demand,” said Farrar.