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AT&T Is Sirius XM's Friend and Foe

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Sirius XM Radio (NASDAQ: SIRI  ) has chosen its wireless carrier partner, teaming up with AT&T (NYSE: T  ) to provide the connectivity behind its telematics offering in new Nissan (NASDAQOTH: NSANY  ) cars.

It's been nearly a year since the satellite radio giant announced that it would be working with Nissan to offer more than premium audio in automobiles. General Motors (NYSE: GM  ) has been the market darling in this niche with OnStar, and you would be surprised at what drivers are willing to pay for emergency support, vehicle tracking, roadside assistance, and other infotainment goodies.

OnStar users pay $18.95 a month -- more than a satellite radio subscription -- for the basic OnStar plan, and that's actually going up to $19.95 a month come October.

Sirius XM and Nissan haven't revealed their pricing plans, but you can be sure that it won't be cheap after a free trial subscription.

Sirius XM couldn't power the connections on its own, so it's only natural that it chose one of the country's two largest carriers in AT&T to partner with here.

The real question here is if pushing users to connected cars will benefit Sirius XM in the long run.

For now, there hasn't been any setback at Sirius XM. It's been able to grow as streaming services explode in popularity, and earlier this year the company even admitted that buyers of connected cars are converting at a higher rate than drivers that don't have smartphone interactions with their automobiles.

However, there always has to be this fear that the more connected that drivers get, the easier it will be to lose them.

"Your future car is going to be a smartphone with four wheels with powerful capabilities specifically built for a safe and enhanced customer experience," AT&T executive Glenn Lurie is quoted as saying in yesterday's press release. He goes on to heap praise on Sirius XM's in-car experience, but widespread connectivity will bring more challenges than opportunities.

Sirius XM has thrived in this climate of Bluetooth-connected smartphone owners -- wrapping up its latest quarter with a hearty 715,000 net new subscribers -- but it may not always be that way. In an apps-driven world, it's not just about free audio entertainment alternatives. Even on the telematics end where Sirius XM is eyeing great things, free or nearly free solutions may eventually eat into OnStar and Sirius XM's new offering.

Sirius XM knows what it's doing. It emphasizes the unique combination of satellite and cellular networks to do things that the competition can't. That's fine -- for now -- but it better know that AT&T is hoping to get something else entirely out of this relationship.

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Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On July 18, 2013, at 9:27 PM, Austin77478 wrote:

    ...... "but it better know that AT&T is hoping to get something else entirely out of this relationship."

    RICK! Could you write the "something else entirely" AT&T would hope to be getting out of this relationship? If you don’t know, do not write such things.

  • Report this Comment On July 18, 2013, at 11:26 PM, zukerman wrote:

    I sincerely hope your not like this at home. When it comes Sirius your never quite satisfied with things. CN will from time to time in his irritating little way hint of problems that may arise, but at least he has substance to back it up. Editors will try to increase views with headlines that use buzz words or purposely mislead throwing the author under the bus, but if this is all you gave him I don't see how. So great, I'm 3 years old again and if I'm not careful the Gingings will get me? I'd rather you told us again how you prefer Slacker or Iheart than warn us of bumps in the night.

  • Report this Comment On July 19, 2013, at 7:30 AM, Varchild2008 wrote:

    AT&T may in fact have something entirely else in mind with a partnership with Sirius XM.

    You see there are these aliens known as Dripjumar from a planet within the Andromeda Galaxy that have decided to wipe out Sirius XM's satellites as they see them as a threat to tgeir terrestrial alien radio stations.

    Fortunately for Sirius XM an intergalactic space hero teamed up with a rebel group of aliens is about to put a stop to the evil Dripjumar. Word on the street has it that AT&T is going to side with the Dripjumar in this war effort....

    Therefore, Presodent Obama has called upon the SEC to do what they can to ensure a level playing field. ITS just not right for a company to conduct espionage and sabotage with the dripjumar aliens like that.

    So....I guess rhis is all conjecture and opinion and fiction as well for now....But if you see pieces of satellite falling from the sky then we will know it was the devious acrions of the Dripjumar aliens and the rebel aliens have failed us all!

  • Report this Comment On July 19, 2013, at 8:28 AM, king4life wrote:

    AT&T's only benefit is to sell bigger data plans.

    If cell or wifi is that available, then SIRI's only advantage is it's lineup of programing and better reception in the city. In the end, if Cell and Wifi is that reliable, Pandora will win with free service.

    And Apple's integration with phone service that blocks outside noise and turns off the music, beats all.

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