An upcoming rate increase appears to be Sirius XM Radio's (Nasdaq: SIRI) cure for a ho-hum quarter.

CEO Mel Karmazin indicated that the satellite radio giant is likely to inch its subscription plan prices higher after the summer expiration of its three-year freeze on primary accounts -- and not by some token inflation-adjusted amount.

It's a good thing Karmazin gave investors a reason to be hopeful about the future, because its latest quarter was a bit of a dud.

Revenue grew 9% to $724 million, matching the 9% year-over-year growth in subscribers. Analysts were hoping for $736.3 million on the top line. It's been awhile since Sirius XM's top line simply matched account growth, but that's because it spent most of the past year and change baking in three different rate adjustments that were instituted through 2009. A little more than half of the company's 14% top-line gain last year was the result of the additional music royalty fees that many subscribers began paying toward the latter half of 2009.

After several quarters of impressive year-over-year gains in average revenue per user (ARPU), it was only a mere 0.3% uptick this time around, to a monthly rate of $11.52. This is disappointing. Howard Stern finally became available through smartphone apps in January. There should have been a wave of Sirius subscribers willing to pay $2.99 a month more to stream Stern online. With Stern locked up for five more years, there should have been a wave of XM accounts willing to pay $4.04 more a month to access Stern and the best of Sirius. 

The $0.04 gain in year-over-year ARPU -- and a sharp sequential drop from the $11.80 average during last year's fourth quarter -- is troublesome. Even Sirius XM's decision to cut its monthly music royalty fee from $1.98 to $1.40 back in December can't fully explain the sequential shortfall, especially since only about half of its subs are paying it and far fewer than that on a monthly basis.

Trial conversions also inched problematically lower. Churn held its own, but dipped sequentially. Why did nearly 1.7 million kiss off satellite radio during the first three months of the year?

Earnings of $0.01 a share matched Wall Street expectations, but the lack of lifting revenue or subscriber targets threatened to rain on Sirius XM's bullish parade after the stock had hit the magical $2 mark in four of the past five trading days.

Then Karmazin played the rate card.

It's easy to get excited about the premise of an increase, especially for a company that hasn't instituted a hike in years. Shares of Netflix (Nasdaq: NFLX) took off last November after introducing its first increase in ages.

We don't know how big the Sirius XM increase will be, though Karmazin did indicate that it won't simply be a move to keep pace with inflation. Sirius XM has paid top dollar for marquee talent over the years. A cynic will point out that programming costs have actually fallen by 3% over the past year given Sirius XM's penny-pinching ways, but the company has years of lost time to make up for when it does come through with an increase.

It can't be by much. If churn is pesky and conversions are slipping now, getting too greedy will jam the phone lines with cancellations. However, if it coincides with the rollout of Sirius XM 2.0 hardware later this year, the increased functionality and 25% more content, then it just might justify a meatier tab.

We'll see how Sirius XM plays it from here. The one aspect of its guidance that it did boost was free cash flow, and the company has done a masterful job of cleaning up its balance sheet with every passing quarter.

The first quarter wasn't special, but if Karmazin's able to pull off a needle-moving increase either later this year or early 2012, without shaking off too many listeners, the stock will keep heading higher.

What did you think about this morning's results? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz is a subscriber to Sirius since 2004. He does not own shares in any of the stocks in this article, except for Netflix. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.