Giving Us Static

Posted: Mar 02, 2007 12:00 AM
Giving Us Static

Some years ago, the rock group Motley Crue enjoyed a minor hit with the song “Don’t Go Away Mad (Just Go Away).” Listeners who want to continue to listen to the Crue on our satellite radios may soon find ourselves hoping our government will do likewise.

Here’s the backstory.

There are two satellite radio providers in the United States, Sirius and XM. I’ve been an XM subscriber for almost two years. Neither company has ever turned a profit, and it’s clearly difficult to remain in business if you’re losing money. So earlier this month, the two companies announced plans to merge.

But that partnership may be blocked by the government.

Back in 1995, when the FCC originally assigned radio frequencies for satellite radio, it announced that “one (satellite radio) licensee will not be permitted to acquire control of the other remaining” provider. And while both companies describe their merger as a combination of equals, the bottom line is that, if Sirius and XM merge there will be only one satellite radio provider.

So the hurdle to a merger “would be high,” as FCC Chairman Kevin J. Martin announced. “The companies would need to demonstrate that consumers would clearly be better off, with both more choice and affordable prices.” However, this brings up an important question: Why should the government be in the business of deciding what’s best for consumers? Especially since in this case the consumers are perfectly able to decide for themselves.

The FCC should take note of the fact that when it comes to satellite radio, listeners are truly “consumers.” Regular radio (which has long been regulated by the FCC) is free. Anybody can buy an inexpensive radio receiver and listen for nothing. Most people, in fact, have several radios scattered around the house.

But satellite radio subscribers pay (about $13 every month) to listen. Thus, we’re able to express our displeasure at any time by canceling our subscription. So let’s suppose that the combined Sirius-XM company decided to balance its budget on the backs of its subscribers by doubling its fees. Angry listeners would revolt by canceling their subscriptions, and revenue would decline.

In other words, we don’t need the government to promote competition in this industry, because the pricing power of the market is very much there. Just as when the price of gasoline goes up people drive less, if the price of satellite radio were to go up, there would be fewer subscribers.

So much for the government’s concern about prices.

As far as competition goes, the FCC should also be aware that there’s already plenty of that in the entertainment industry, and much of it has developed since the FCC’s ruling in 1995. Back then people could listen only to the radio or carry a portable CD player. But today, there are iPods, MP3 players and even phones that store and play music. Consumers have plenty of options, and if the price of satellite radio soars, we’ll simply switch to other devices to listen to music.

However, as Alanis Morissette might say, there is a bit of irony here. While the government says it plans to examine this merger to see whether it will promote competition, at least one group aims to use the government to rein in its competition.

Here’s what David Rehr, the president of the National Association of Broadcasters, had to say: “Policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming. We’re hopeful that this anti-consumer proposal will be rejected.”

It’s nice to know that the man who’s paid to represent traditional radio broadcasters claims to be concerned about my welfare as a consumer of his competition. But what Rehr’s comments really mean is that a coalition of broadcasters wants to use the power of the government to hamstring its own competition. Nice work, if you can get it.

Even if the government allows the Sirius-XM merger, there will still be plenty of competition in radio. There are plenty of free, over-the-air stations available to anyone. And now there’s HD radio, which has a better signal and is also free once you’ve invested in the actual receiver.

Listeners don’t need the government or so-called “consumer advocates” to protect us. We need them to get out of our way and allow a business to operate. It’s time for consumers to tell Washington to “just go away.”