Changes/Clarifications Needed Before Sirius-XM Proposal Passes Public Interest Test

FCC

Late yesterday afternoon, Sirius and XM filed a letter with the FCC that lays out the "voluntary commitments" the companies will abide by in exchange for the FCC approving their merger. As I predicted yesterday, the commitment to provide 4% of channel capacity set-aside for noncommercial, educational and informational programming falls a good bit short of what PK and others have asked for. While we're disinclined to fight over 1% of capacity (PK is asking for a 5% set-aside), there are other parts of this and other "commitments" that need change and clarification:

1. Channel capacity, not live, "full-time" channels, should be the metric for the non-commercial set-aside.

Sirius and XM say that they will set aside four percent of the "full-time audio channels" on their respective platforms, which they say currently represents 6 channels on each service. They define full-time audio channels as

the aggregate number of channels of music, news, sports, entertainment or audio programming broadcast on a continuous basis, 24 hours a day, seven days a week, plus part-time channels aggregated on a full-time equivalient basis....

Using full-time channels as a metric can make for all sorts of monkey business. If the company shuts off all of its channels for 5 minutes a day, does that mean the set-aside is zero channels? Why should the set-aside be dependent on the number of hours the merged entity decides to program a particular channel? The proper metric for the set aside should be a percentage of the total channel capacity, whether those channels are being used full-time, part-time or not at all.

2. No programmer should be allocated more than one set-aside channel.

The non-commercial set-aside that PK has proposed is modeled on a similar set-aside that Congress mandated for direct broadcast satellite providers under the 1992 Cable Act. When the FCC implemented that provision, it programmers to one set-aside channel each. The commitment letter does not agree to abide by that rule.

3. Programming already on Sirius and XM should not qualify for the set-aside.

Representatives for Sirius have continuously told us that they "already meet" the set-aside requirement because they deliver what they believe to be sufficient non-commercial educational programming (but see discussion in nos. 1 & 2). But the point of the set-aside is to permit programming that would not otherwise be carried on a national satellite radio service to get access. The only way to do that is to prohibit current non-commercial programming from counting towards the set-aside requirement. Otherwise, the public is getting nothing more in exchange for the merger.

Unfortunately for the companies, PK is not the only group with set-aside issues. Minority members of Congress are upset with the 4% set-aside for a commercial service programmed by underserved communities. The original request (by Georgetown Partners) for such a set-aside was 20%. PK has suggested in meetings with FCC officials that 10% commercial/5% noncommercial channel capacity set-aside might be a fair allocation.

4. The open device commitment must be free of loopholes.

PK will also seek clarification of the open device commitment. The commitment looks pretty good, until you read the section about intellectual property (what else is new? sigh). That section says that the merged entity

will offer for license, on reasonable and non-discriminatory terms, the intellectual property it wons and controls of the basic functionality of satellite radios that is necessarily to independently, design, develop and have manufactured satellite radios (other than chip set technology, which technology includes its encryption and conditional access keys) to any bona fide third party....Chip sets for satellite radios may be purchased by licensees from manufacturers in negotiated transactions with such manufacturers.

[Emphasis mine]

This begs the question - why are chip sets excluded from reasonable and non-discriminatory licensing to third parties? And does this exclusion undermine the entire open device provision? The companies need to explain why there needs to be a difference and how this open device requirement is truly "open."

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