US Satellite Radio Subscriptions Grow Amid XM/Sirius Merger
On July 27, Sirius Satellite Radio announced that its subscriber base reached 8.9 million subscribers to-date, up from 7.1 million subscribers in the same time period last year. The week prior, XM Satellite also reported subscriber growth to 9.6 million subscribers to-date. Each satellite radio service provider also reported narrowing quarterly revenue losses this month.
These were the last two reports the satellite radio service providers filed separately. As of July 29, Sirius and XM officially merged to create Sirius XM Radio, Inc. The combined company now has a subscription base of approximately 18.5 million.
Potential benefits of the merger include cost reductions for licensing broadcast material, and the fact that programming will be distributed among the merged company's seven satellites, improving overall availability of content to subscribers of both services.
The primary concern regarding the merger is that the combined satellite radio network will create a monopoly, resulting in higher subscription prices to consumers. However, both Sirius and XM have assured the FCC that prices will be capped for the first three years. The merged company will also offer an “a la carte” subscription model that will allow subscribers to choose the specific programming that they want to receive.
Satellite radio subscriptions have been slowing over the last two years. If Sirius XM Radio, Inc. effectively promotes these new prices and programming options, subscriber levels could reach new highs, and give satellite radio the boost it has needed over the last two years.
For more information regarding both satellite radio and digital terrestrial radio, look for In-Stat’s upcoming Worldwide Digital Radio Market report update due in the fourth quarter of 2008. It will be published in In-Stat’s Portable Entertainment Device (PED) service – take a look at all of our PED research online at: http://www.instat.com/catalog/mmcatalogue.asp?id=27
- Stephanie Ethier - Industry Analyst
, E-mail:stephanie.ethier@reedbusiness.com
Last Friday, the Federal Communications Commission (FCC) approved an enforcement order against Comcast requiring the company to “stop blocking and slowing Internet traffic” and to publicly disclose its network management practices. The FCC's decision was the first time that the commission formally ordered an Internet service provider (ISP) to comply with network neutrality guidelines and disclose how it manages traffic. Also notable was the lack of a fine against Comcast, which effectively made the ruling something akin to a slap on the wrist.
The ruling came after critics complained that Comcast had targeted and deliberately slowed the connections of subscribers using BitTorrent’s peer-to-peer (P2P) file sharing protocol. Comcast admitted that it actively tracked and managed bandwidth being consumed by BitTorrent users, although the company repeatedly stated it only slowed or blocked traffic to alleviate overall network congestion. While managing bandwidth on a network is a common practice among ISPs, the fact that Comcast had specifically targeted the BitTorrent protocol provided the FCC with enough ammunition to make an example out of the cable operator.
With an eye on defusing criticism about its network management methods, a few months ago Comcast announced that it was creating "protocol-agnostic network management" methods and would switch to them by the end of this year. The company also announced joint efforts with BitTorrent, Pando Networks, and Vonage to improve network management and adhere to the P2P “best practices.”
However, this voluntary change wasn’t enough to placate the FCC. As part of the ruling, the commission stipulated that Comcast has to submit its network management plans to the FCC in the future, thus turning (or attempting to turn) the FCC into the overseer of the country’s network management practices.
So what else does this decision mean? A few things jump out at us:
- Due to the specificity of the case (e.g. bandwidth management targeted at BitTorrent users), most industry observers don’t believe it can be used as a precedent to change current network management practices. - Serious questions remain about whether or not the FCC has the authority to enforce its decision. Comcast is expected to appeal this ruling, which means it could get hung up in court for years. - According to cable TV industry insiders, FCC Commissioner Kevin Martin is specifically targeting the cable industry with his “activist regulatory agenda.” While these charges have been made before, cable industry executives are looking forward to him being replaced by the new administration next year. - The Internet in this country has prospered in part due to the laissez-faire environment championed by ISPs, applications developers, content developers, and telecommunications regulators. While we don’t see this decision as a harbinger of widespread regulatory change in the US, it has effectively drawn a line in the sand between the network service providers and some applications developers, and we expect further friction to develop between the two groups.
The decision also highlights how managing bandwidth on a broadband network is a hot topic. Here at In-Stat, we will continue to report on bandwidth and network management in our Multimedia Broadband and Multimedia Broadband Infrastructure research services.
US Businesses Spending More on Hosted VoIP and Broadband IP Telephony, but not Enough to Offset Declines in Local and Long Distance Spending
The US business market continues to spend more on local service than on any other area of wireline voice services expenditure in 2008. Most of this spending is done by firms with less than 1,000 employees. Enterprises with 1,000 or more employees devote the largest portions of their wireline voice budgets to long distance service. Spending on both local and long distance services is expected to decline going forward, experiencing CAGRs of -6% and -10%, respectively, through 2012.
The positive trend in wireline voice is the growing spending on VoIP. Growth is expected to be strong across size of business, but spending among smaller businesses is expected to grow most quickly. Hosted VoIP and broadband IP telephony are expected to experience CAGRs of 54% and 26%, respectively, through 2012. While spending on these two areas will experience exceptional growth moving forward, they will not soon surpass spending on traditional local and long distance services, as hosted VoIP and broadband IP telephony represent such a small portion of wireline voice services spending, just 4% in 2008.
The combined trends of declining local and long distance spending and the growing spending on VoIP services make for a -5% CAGR for total wireline voice services spending through 2012. Enterprises make up the largest portion of wireline voice spending, 43% in 2008. Mid-sized businesses (100 to 999 employees) account for 15% of the market. Small businesses (5 to 9 employees) and SOHO businesses (1 to 4 employees) make up 31% and 11%, respectively, the majority spent on local service.
In-Stat’s “US Business Wireline Voice Services Spending Summary by Size of Business, 2007–2012” data file presents US business wireline voice spending forecasts by product with size of business segmentation. For more information on this research or to purchase it online, please visit: http://instat.com/catalog/ecatalogue.asp?id=312
- Jeff Wilson - Senior Analyst
, E-mail:jwilson@reedbusiness.com
