The history of portable satellite radios is short compared to
traditional over-the-air radio, but it has rapidly changed the
face of radio listening like no other technology in recent memory.
The two major satellite radio services, XM Satellite Radio and
SIRIUS Satellite Radio, offer a stunning array of programming
and compete fiercely for customers.
Their popularity has stunned many in the radio industry and
with the advent of new, smaller, more convenient portable satellite
radios, some industry veterans worry about the future viability
of traditional broadcast radio.
How did satellite radio get started and what is its future?
Let’s take a look.
The Beginnings of Satellite Radio
The history of satellite radio begins in 1992, when the Federal
Communications Commission (FCC) decided to set aside a portion
of spectrum to be devoted to nationwide distribution of digital
radio service via satellite. SIRIUS Satellite Radio and XM Satellite
Radio bid huge amounts of money (at least $80 million each)
for licenses to use this new allocation of spectrum, which were
eventually awarded to them by the FCC.
Owning the right to use the spectrum, though, was only the first
step. Even if they could start delivering satellite radio signals
right away, there were no consumer-accessible portable satellite
radios to receive the signal. Additionally, there was substantial
debate within the radio industry about whether consumers would
be willing to pay for new hardware and then pay a monthly subscription
fee for radio service. After all, AM and FM radio broadcasts
were available free all over the country.
Making a Business out of Satellite Radio
XM Satellite Radio and SIRIUS Satellite Radio set out to overcome
these obstacles and make a real business out of portable satellite
radios and satellite radio programming. They knew that to attract
the most consumers they needed to offer a variety of hardware
components that could be used in a variety of locations – home,
work, and especially the car, where most radio listening occurs.
Working with electronics manufacturers already trusted and recognized
by consumers (Sanyo, Panasonic, JVC, Kenwood, etc.), hardware
development got underway. The results included portable satellite
radios, receivers, and “plug and play” components for nearly
every consumer application. Manufacturers built satellite radio
receivers for cars, homes, offices, trucks, RVs, boats, and
On the programming side, XM and SIRUS put together an assortment
of niche music stations that would have something to offer consumers
with nearly any musical taste. Each station was programmed to
appeal to a specific type of listener, and most were commercial-free.
Programming originated primarily from New York, but also from
other locations, plus XM and SIRIUS entered into collaborative
agreements that would allow popular musicians, entertainers,
personalities and others to perform live from the originating
locations. This would give the services another unique selling
point to attract consumers.
Dealing with resistance to a monthly fee, though, required a
broader array of marketing, public relations, and strategies
to communicate the benefits and advantages of portable satellite
radios. XM and SIRIUS knew that the key to their success would
lie in convincing consumers of the value they would receive
while making the hardware widely available and affordable.
Spreading the Word
Portable satellite radios began to show up in a variety of places
where consumers would find it easy to use them. One of the most
important places for XM and SIRIUS to gain entry for the hardware
was in cars and trucks, where consumers do the vast majority
of their radio listening. They collaborated with car and truck
manufacturers to make portable satellite radios standard on
many high-end luxury vehicles, and an affordable option on most
other mid-range vehicles. For most of these consumers, the cost
of a monthly subscription would not be prohibitive and by making
it easy for them to access their services, XM and SIRIUS could
entice consumers to try it out and start spreading the word
about its value.
Why Pay for Radio?
Still, the bottom line question for most people is why pay for
radio? The answer is in the benefits received with a subscription
to satellite radio. Some of the most popular benefits include:
More channel choices (up to 150) Commercial-free (music channels)
Live audio streaming of sporting events Weather and traffic
information (in major markets) Clear, crisp digital signal Signal
available with no fading when driving long distances Niche music
stations to suit any musical taste Assortment of sports, talk,
and news stations