Foldvary: Satellite Radio
|April 27, 2004||Posted by Fred Foldvary under Progress Report, The Progress Report|
by Fred E. Foldvary, Senior Editor
The next wave in communications will be satellite radio. Millions of drivers commute to work listening to the radio, creating a huge market for radio programs. A new alternative to broadcast radio is the transmission of digital radio signals from satellites, which began in 1999. Because the signals are digital, i.e. bits of numbers, the quality is about equal to playing a disk. Besides static-free programs, an advantage of satellite radio is that the frequency remains available to those such as truck drivers traveling a long distance, whereas with broadcast radio, the signal will fade away into noise as one travels away from the source.
Satellite radio also substitutes for broadcast ratio at the home and office. One has to buy a satellite radio player and also subscribe to the service. In the USA, the Federal Communications Commission (FCC) has set up a duopoly to provide satellite radio programs, XM Satellite Radio and Sirius Satellite Radio. So far there are few subscribers, but new cars are being equipped with satellite radio receivers, creating a potentially huge market.
Why should somebody pay around $10 per month or more to get satellite radio, when one can get broadcast radio free? One reason is that satellite radio has no commercial ads. One can listen to music without being annoyed by ads that interrupt the programming and take up about one fourth of the broadcast time. Secondly, as mentioned, digital reception provides a high-quality sound. Third, as with cable television, satellite radio offers a much greater choice of programs. Most people with television subscribe to cable programming for the same reasons.
Both services have over 100 channels. Sirius also offers TV channels, so drivers with video players in the back seat can keep their bored children occupied rather than constantly whining, ‘Are we there yet?’ Present and future possibilities include the audio of television programs, weather information, financial market updates, and local traffic reports.
With satellite radio built in, those who buy cars will be tempted to subscribe to satellite radio. Besides broadcast radio, satellite programs also compete with CDs and audio tapes. For those who want ever new music and programs, the cost of satellite radio will be less than having to buy new disks and tapes.
A great advantage of satellite radio today is that it is uncensored. In the US, the FCC controls the content of broadcast television. Even when the FCC does not explicitly censor the programs, it controls the license, which can make a station owner fearful of offending the regulators. With the Patriot Act, new laws on political campaigns, and greatly expanded fines for violating decency standards, the federal government is clamping down on what can be broadcast.
For example, six Clear Channel radio stations terminated the shows of Howard Stern because they are regarded as offensive. His talk show, which reaches over 8 million listeners, features politically incorrect erotic themes and political opinions. Stern wants to be able to freely say anything he wants without being bleeped out or censored. He has opposed the FCC fines on broadcasters for indecency.
The House of Representatives has passed the Broadcast Decency Enforcement Act which substantially increases the penalties and applies them also to the show hosts. Stern says that after the Senate passes it and it becomes law, he may quit his broadcast radio programs. Satellite radio offers an alternative medium for his shows, which would not be censored. If Stern switches to satellite radio, he could take millions of his fans to satellite.
There is a huge potential global market for satellite radio, because besides the quality and choice, satellite radio offers an escape from the governmental censorship of political speech. As for decency, with digital transmission, satellite radio offers channels which are decent, so that parents can play those stations without worry. Technology could be developed to block out indecent programs.
The U.S. government regulates the contents of radio and television because the spectrum is a natural resource that belongs to all the people. As agent of the people, the government restricts the contents of programs because presumably that is what most people want. But there is a different way of implementing the common ownership of the electro-magnetic spectrum. The geoist way is that the economic benefit of the resource should belong to all the people, but that those who possess particular frequencies should have full rights of possession.
The economic benefit of the spectrum is the annual rent that broadcasters are willing to pay. The geoist way would be the same as with real estate land, to charge each spectrum user the rent, and then let the user have full control of the use of that frequency, with no censorship. Billions of dollars of public revenue could be raised from spectrum rentals, which would reduce the huge federal budget deficit.
If people are offended by a program, they are free to switch it off. If they fear their children hearing it, there would be a demand and supply for technology that limits a radio to decent stations. The way it is now, government subsidizes the spectrum holders by granting them the use of the public’s spectrum at no charge, and then privileges those who have decency preferences with restrictions that cost them nothing but imposes a cost in the form of restricted speech and music for those who prefer uncensored stuff.
Satellite radio will reduce broadcasting privileges. A massive shift to satellite radio will greatly diminish the audience for broadcast radio, reducing ad revenue and the rental value of those spectrum frequencies. Better technology makes it more difficult for government to regulate and reduces the justification for restrictions. Hurrah for high-tech radio!
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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