As I write tonight, I have The Hunt for Red October playing in the background; I recently downloaded it from the iTunes Store. Earlier, I had some videos from the Schoolhouse Rock collection, which I also downloaded, playing for our three small kids on my wife's PowerBook. And before that, I was listening to public radio on the Web while hunting and pecking my way through the day's articles. My point? Thanks to the Internet, access is no longer an issue when it comes to digital entertainment.
Why 2007 isn't 2002 all over again
That matters a lot in this debate over whether the merger of Sirius Satellite Radio
"The proposed merger would eliminate an existing viable competitor in every market in the country," former FCC Chairman Michael Powell said at the time. "Those Americans would be left with only one choice for their subscription video service, now and in the foreseeable future."
Fast-forward to today. Roughly 50 million American households -- about 45% -- have broadband access. And they're increasingly getting video from Web sources such as Apple's iTunes, which, thanks to deals with Paramount, Disney
Who needs cable? Or, for that matter, satellite?
Face the truthiness about the feds
Interestingly, the feds have begun to see the problem with broadcast and telecommunications in all of its forms. That's why the U.S. government hasn't stood in the way as access providers that were once forced to split have combined.
Meanwhile, in radio, terrestrial stations managed by the likes of Clear Channel
If that's true -- and I've no reason to believe it isn't -- then nixing a deal between Sirius and XM on competitive grounds could be like feeding beer to a sick cow. Sure, it might look interesting, and given enough brew, it might even dull the pain. But the cow is still going to die. Terrestrial radio, too. Or at least the terrestrial radio that we know and (mostly) love today.
Tuning in to the real competition
Which brings me back to the Web. Online radio is a booming business that now boasts some 65 million listeners -- 65 million! That number will likely grow, thanks to the relative ease of streaming radio over a Web connection. In most cases, a simple MP3 file will allow you to listen to broadcasts from around the globe.
My MacBook Pro offers a reasonable example. My snooty taste is varied, but thanks to a few quick downloads, I get classical public radio here in Colorado and from Washington, D.C. And thanks to a handy widget in the Mac OS Dashboard, I'm also able to stream the BBC.
Therein lies the problem for Sirius and XM, which together would have just 14 million subscribers. With all of the special equipment required, it's a lot harder to become a satellite-radio subscriber than it is to get radio over the Web, or on FM.
Meanwhile, wireless technology called WiMAX could, once widely implemented, make it easy to broadcast Internet signals across entire metropolitan regions. Chances are that everyday use of WiMax is still several years away. But for me, it's enough to know that the technology is working to replace the need for Sirius' and XM's satellites.
A Foolish sign-off
Those who read my column last week know that I think Sirius and XM should take a lesson from jujitsu and embrace the Web for its own uses. By combining forces online immediately, Sirius and XM could create the world's best Web radio station, blunting a sharp threat in the process.
Meanwhile, and with apologies to my friend Rick, the feds are crazy if they don't let this deal go through. After all, a monopoly means nothing if you're monopolizing an industry whose economics pale next to those that the downloaders and Web broadcasters offer. They'll kill satellite radio unless the government does something to prevent it.
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Fool contributor Tim Beyers, ranked 775 out of more than 23,500 in our CAPS investor-intelligence database, likes his radio streamed, not downloaded. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. All of Tim's portfolio holdings can be found at his Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy tunes in accountability.