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Federal Communications Commission Chairman Kevin Martin said Thursday he expects the agency to make a decision soon about the Sirius Satellite Radio merger with rival XM Satellite Radio.

Martin said during an interview on CNBC's Squawk on the Street Thursday that he expected the commission to "do something soon." But he defended the long review process by saying that the deal was "extraordinary" and raised difficult issues. Specifically, he said the FCC already had a rule in place that prohibited the merger of the two satellite radio companies.

Originally, the agency barred satellite radio companies from combining. But the rule could be changed, especially as satellite radio faces more competition from Internet music services, music playing phones, and online music stores like Apple's iTunes that allow people to play music on iPods.

Martin acknowledged that the two companies had made pricing concessions in order to get the deal approved by regulators. In March, the Justice Department concluded that the deal would not "substantially lessen competition."

The FCC is the final regulatory hurdle the companies need to move the merger forward. The deal, which was valued at $13 billion in February 2007 when it was announced, was approved by XM and Sirius shareholders last December.

Martin had indicated at the end of March that the agency was inching closer to a decision on whether the deal passes muster. But two months later, the FCC still hasn't announced a decision.

Meanwhile, XM and Sirius have been burning cash as competition from online video and music sites has grown over the past year and a half. Critics wonder what's taking the agency so long to decide. When asked during the CNBC interview if the commission was under an obligation to make its decision sooner rather than later, Martin had this to say:

"I think we are under an obligation, but this is an unusual circumstance...This was unlike any other merger that's come in front of us. We have a rule that would prohibit it from going forward. I think they're asking for something extraordinary, and the commission is taking a look at it. We'll get back to them soon."

Tivoli unveiled its NetWorks Go Wi-Fi radio in 2007, but it was subsequently delayed its release.

(Credit: dvice.com)

In June 2007, Tivoli Audio unveiled two Wi-Fi radios at a Manhattan event: the Tivoli Audio NetWorks tabletop radio and the portable NetWorks Go (pictured above). Both models were said to offer identical functionality: the capability to tune in any MP3, WMA, or RealAudio Internet radio station, network audio sources (PC-based digital music collections), and standard over-the-air FM radio. And it wasn't just vaporware, either: company founder and CEO Tom DeVesto used the prototype to quickly pull up two distant stations based on requests from the audience. Unfortunately, neither product was released. The fall 2007 release window came and went, and it wasn't until February that a brief notice on Tivoli's Web site officially rescheduled the release date to June 2008.

However, it looks as if later this week we'll be getting updates on these products. ... Read More

The proposed merger of XM Satellite Radio and Sirius Satellite Radio may have sailed through a U.S. Department of Justice review without conditions, but key congressional Democrats are urging the Federal Communications Commission to impose limits designed to protect consumers.

In a letter on Thursday (PDF), Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass.) said they're not taking a position on whether the FCC should clear the deal, but they believe the regulators should consider certain steps as they weigh whether the union of the only two U.S. satellite radio operators satisfies the "public interest." Dingell and Markey are the chairmen of two House of Representatives panels that oversee the FCC.

Here's the relevant portion outlining what they'd like to see:

First, the Commission should require the merged entity to adhere, at a minimum, to the pricing constraints that XM and Sirius have already submitted to the Commission. Such a condition would ensure that a combined entity does not take advantage of consumers by leveraging its position as sole provider of satellite radio services by raising prices.

Second, the Commission should require the merged company to permit any device manufacturer to develop equipment that can deliver the company's satellite radio service. Device manufacturers should also be permitted to incorporate in satellite radio receivers any other technology that would not result in harmful interference with the merged company's network, including hybrid digital (HD) radio technology, iPod ports, Internet connectivity, or other technology. This principle of openness would serve to promote competition, protect consumers, and spur technological innovation.

Attorneys general from 11 states have made similar recommendations. In their effort to win over regulators last year, the two companies unveiled plans to offer new packages of channels at reduced rates and committed, at least informally, to not raise their monthly subscription fees.

FCC Chairman Kevin Martin said in late March that the agency is inching closer to a decision on whether the deal passes muster.

The Justice Department, for its part, concluded that the merger would not "substantially lessen competition," and XM and Sirius shareholders approved the transaction last December.

The FCC has already suggested that its bar for approval is higher. In 1997, the agency adopted an order prohibiting such a merger when it would result in only one operator controlling all satellite radio spectrum. In addition, terrestrial broadcasters and some consumer advocacy groups oppose the merger.

Updated at 10:58 a.m. PDT to add comment from the broadband-over-power lines industry.

Updated at 5:22 p.m. PDT to correct the number of broadband-over-power lines subscribers.

In a potential setback for fans of broadband over power lines, a federal appeals court has sided in part with amateur radio operators who challenged rules designed to speed the nascent Internet service's rollout.

When setting rules for BPL operators nearly two years ago, the Federal Communications Commission said it was trying to encourage deployment of a "third pipe" to compete with cable and DSL services, while establishing limits aimed at protecting public safety, maritime, radio-astronomy, aeronautical navigation, and amateur radio operators from harmful interference. The American Radio Relay League (ARRL), which represents amateur and ham radio operators, however, promptly sued the agency, contending that the FCC's approach was insufficient to ward off interference with its radios and inconsistent with its previous rules.

On Friday, the U.S. Appeals Court for the District of Columbia on Friday issued a ruling (PDF) that took issue with the way the FCC arrived at its rules.

During its rulemaking process, the FCC relied on five scientific studies that measured BPL devices' radio emissions, in an attempt to determine interference risks with other users of the spectrum. Although the agency released those studies during a public comment process required by federal law, it redacted portions of them, arguing they were just "internal" communications that didn't influence its deliberations. But after reviewing the unredacted studies in private, the majority of the judges agreed with the ARRL that it was against federal administrative procedure law to keep those portions under wraps, particularly since they could called the FCC's rules into question.

"It is one thing for the Commission to give notice and make available for comment the studies on which it relied in formulating the rule while explaining its non-reliance on certain parts," D.C. Circuit Judge Judith Rogers wrote. "It is quite another thing to provide notice and an opportunity for comment on only those parts of the studies that the Commission likes best."

The court also said the FCC had not offered a "reasoned explanation" for why it rejected ARRL-submitted data that could have influenced its interference estimates and potentially reshaped its rules. The judges opted to send the rules back to the FCC with instructions to clarify those points and publicize its studies more fully, although they did not overturn the rules themselves.

The court did not side entirely with the ARRL on other key points related to the substance of the rules.

For instance, the ARRL had argued that the FCC was departing from longstanding agency precedent by refusing to require that BPL operations found to cause "harmful interference" be shut down immediately--the so-called "cease-operations" rule. The court wasn't persuaded by that argument, saying the FCC had explained adequately that there isn't ample evidence that "harmful interference" is a real risk.

Still, the court's decision could be significant if it ultimately prompts revisions to the FCC's rules, which could in turn force some BPL operators to change the way they operate or create new legal uncertainty for their operations. The FCC declined to comment on the decision Monday.

The ARRL was quick to applaud the ruling.

"It is obvious that the FCC was overzealous in its advocacy of BPL, and that resulted in a rather blatant cover-up of the technical facts surrounding its interference potential," ARRL general counsel Christopher Imlay said in a statement. "Both BPL and Amateur Radio would be better off had the FCC dealt with the interference potential in an honest and forthright manner at the outset."

The United Power Line Council, which represents the BPL industry, downplayed the significance of the ruling, saying it was largely procedural and noting that the current rules remain in effect.

"We're a little surprised that the court took issue with those two issues that it did send back, but I expect the FCC will work quickly on those and come to a conclusion soon," said Brett Kilbourne, the group's director of regulatory affairs.

According to the UPLC, there were approximately 35 BPL deployments around the United States as of last year. As of the middle of last year, there were about 5,000 U.S. BPL subscribers, according to the FCC's latest data (PDF).

LAS VEGAS--Over-the-air radio broadcasters have a plan to stay relevant even as their listeners continue to migrate to the Web.

(Credit: Radioheardhere.com)

Radio Heard Here, a new initiative from the National Association of Broadcasters (NAB) and the HD Digital Radio Alliance is focused largely on trying to convince the public that radio remains relevant.

The plan calls for a public-relations campaign, including video ads on YouTube, and a method to connect players online. But there's little real meat. In reality, it's a response to those skeptical about the industry's chances to survive in the Internet era who have lately given radio plenty of static.

BusinessWeek's Jon Fine wrote a column in February titled "Requiem for Old-Time Radio."

Without even getting into the problems the iPod has posed, Fine notes that revenues are plunging and listeners are leaving. The Internet has turned countless people into disc jockeys and enabled them to compete with traditional radio stations. And radio's carefully controlled and limited playlists compare unfavorably with the vast array of music available on the Web.

"The explosion in both expression and availability, first on independent labels and now everywhere, thanks to the Internet," Fine wrote, "began overtaking commercial radio stations well over 20 years ago."

Naturally, radio broadcasters don't see it that way. They note that radio still plays a huge part in people's lives, during their work commutes, for example. They point to the development of high-definition radio and how automakers are starting to adopt the technology. They maintain that commercial radio can and will fit nicely on the Web.

NAB CEO David Rehr told an audience at the NAB 2008 conference here Monday that what radio has always offered is "connection" to listeners. "Technology hasn't changed that," Rehr said. "It has just changed the devices of delivery."

(Credit: DOD)

The Pentagon has awarded defense heavyweight Lockheed Martin the contract for next-stage development of the Joint Tactical Radio System (JTRS), a new-generation radio technology that will replace dozens of legacy systems throughout the U.S. military (PDF).

Initial design and development costs for this phase, called Airborne Maritime and Fixed Station, will run $800 million to $1.2 billion, with a potential $10 billion more for full production later. Boeing and Lockheed Martin worked on separate preliminary designs for the new programmable, tactical radio system, but only Lockheed nailed the contract.

The Department of Defense initiated the JTRS program in 1997 to bring military communications into the network-centric digital age. The program, which could ultimately result in the replacement of hundreds of thousands of radios, has been plagued by massive cost overruns (PDF) and lack of vision. This contract signals a major step forward.

Incorporating advanced software and network capabilities for secure voice, text, and video communications that can operate across the frequency spectrum, the AMF JTRS is expected to enable any ad hoc mobile wireless network of vehicles and planes to connect instantly using the Wideband Networking Waveform.

That is, if it's not obsolete by the time it hits the quartermaster's shelf.

Attorneys general from 11 states urged the Federal Communications Commission on Thursday to impose conditions on the proposed union of Sirius Satellite Radio and XM Satellite Radio should the agency decide to approve the megamerger, according to Reuters.

The state leaders said they were disappointed by Monday's decision by U.S. Justice Department antitrust regulators to let the deal go through without conditions. They suggested restrictions that would preserve competition and protect consumers, such as requiring "Sirius and XM to make interoperable radio receivers available to customers, offer different packages of channels on an a la carte basis, and divest some radio spectrum that would allow another competitor into the business," according to the story.

Sirius' proposed acquisition of XM--an all-stock deal now valued at $5 billion--still needs approval by the FCC, which had warned that the companies had high hurdles to surmount before gaining approval. Among other things, that's because in 1997, the FCC adopted an order prohibiting such a merger when it would result in only one operator controlling all satellite radio spectrum.

Delphi booth with XM Skyfi2 satellite radio (File photo)

(Credit: Declan McCullagh/CNET News.com)

CNET News.com's Declan McCullagh and Anne Broache wrote this article.

It may seem that the Bush administration's approval of the Sirius-XM merger should invite a rush of deals before the next presidential administration, which could be Democratic and therefore more hostile to billion-dollar corporate combinations.

After all, Democrats have spent years alleging that the Bush crowd is overly merger-happy--with the corollary implication that a Clinton or Obama administration won't be. One 2006 column in the New York Times charged that there was a "lack of interest in antitrust enforcement these days," and one frequent liberal lament has been that the incoming Bush Justice Department settled too quickly with Microsoft in late 2001.

But academics who have compared the antitrust enthusiasm of Democratic and Republican administrations have found that the reality of antitrust challenges is more complex, and perhaps even a bit counterintuitive. (This matters for mergers including Microsoft's planned purchase of Yahoo, which is already facing antitrust scrutiny.)

A 2001 study by economics professors from the Georgia Institute of Technology and the University of Cincinnati found that "politics, as measured by the party of the president and the Republican versus Democrat composition of the House and the Senate, does not have a clear impact" on the number of antitrust cases filed by the government.

Subsequent research by economists Tom Fomby and Dan Slottje of Southern Methodist University arrives at the same conclusion by analyzing criminal and civil antitrust filings by the Justice Department from 1925 to 2002. They found that the political party in the White House doesn't matter; neither does whether it's an election year or not.

What does seem to matter is economic activity. When unemployment is increasing, they concluded, Justice Department officials are less likely to bring antitrust cases (perhaps for fear of creating more unemployment). When inflation is increasing, on the other hand, antitrust litigation is more likely (perhaps based on the belief that monopolies cause inflation). They dubbed this the "Economic Reticence Index," and believe that unemployment is a more important factor than inflation.

If that's true, and if the Bush administration is no different from its Republican predecessors, a housing-led recession dragging on through 2009 and 2010 could yield relatively easier approvals for Microsoft-Yahoo and other possible mergers. The bust following the unsustainable boom--created by an expansion of the money supply--has already caused layoffs in the housing sector, and greater overall unemployment seems likely to follow.

But the assumption that the Bush Justice Department is similar to other Republican Justice Departments may not be true. Vivek Ghosal, the Georgia Tech professor who co-authored the 2001 study, told CNET News.com in an e-mail message on Monday that the Bush administration "has been a true outlier with a very low level of merger scrutiny and challenges."

Translation: Any two companies eyeing a wedding had better hurry up with the nuptials.

"The Bush administration has apparently never seen a telecommunications merger it doesn't like," said Rep. Edward Markey, the Massachusetts Democrat who leads a House of Representatives telecommunications and Internet panel. "Its decision to approve the XM-Sirius merger without conditions is therefore unsurprising."

Sen. Herbert Kohl, the Wisconsin Democrat who leads the Senate's antitrust panel, similarly accused the Bush administration's Justice Department of repeatedly "failing to oppose numerous mergers, which reduced competition in key industries" and "not bringing a single contested merger case in nearly four years."

"You're certainly not going to be better off waiting for another administration, and you may very well be worse off," said Mark Ostrau, co-chairman of the antitrust and unfair competition group at Fenwick & West in Mountain View, Calif. "I think (Bush administration officials) have been, on the margin, more permissive than others."

Ostrau said he thought that if, for example, the XM-Sirius or the Whole Foods-Wild Oats mergers had been subject to scrutiny by the Clinton administration's Justice Department, it would have "either challenged or sought some concessions," although he acknowledged that the Federal Communications Commission, which is still reviewing the satellite radio deal, may still do that.

In the communications sector alone, the Bush administration has approved the sizable mergers of AT&T and BellSouth, AT&T and SBC Communications, Verizon and MCI, Google and DoubleClick, and Microsoft and Aquantive, to name a few.

"The general attitude among antitrust professionals today is that the Bush administration has been less aggressive in its merger policy than prior Democratic administrations," added Albert Foer, an attorney who serves as president of the American Antitrust Institute, a think tank that supports more extensive use of antitrust law. "This is borne out in the numbers and in surveys of practitioners and seems unrelated to the rise or decline in numbers of mergers."

Should a Democratic president be elected this fall, his or her Justice Department might require companies to acquiesce to more regulatory demands to get mergers approved, and where the situation might be a close call, it might be more inclined to stop the merger than the current administration would, Foer said.

Some mergers, such as Microsoft's Aquantive deal, have been allowed to proceed without an extended probe. One way of gauging the merger-friendliness of an administration is whether it opts to open such a review, said John M. de Figueiredo, a professor of law and strategic management at the University of California at Los Angeles.

"If one looks at the number of cases...it is generally seen that Republican administrations, when backed up by a Republican Congress, are more favorable to mergers and acquisitions than is a Democratic president when it's a Democratic Congress," he said in a telephone interview.

Still more research suggests that, when it comes to the Federal Trade Commission, the likelihood of merger challenges is related to interactions between the White House and the U.S. Congress--which oversees the Justice Department and the FTC and approves their budgets. (The two agencies share responsibility for challenging mergers.)

"A company wanting to press a questionable merger might want to time it to be handled by the current administration," Foer said. "But many other considerations besides antitrust policy go into the strategic decisions that corporations make."

This story was updated at 2 p.m. PDT with new information and again at 10:30 p.m. with the correct title for Mel Karmazin. He is the CEO of Sirius.

The proposed union of XM Satellite Radio and Sirius Satellite Radio won approval Monday from the U.S. Department of Justice, after more than a year of review.

Antitrust officials said they concluded that combining the only two satellite radio players would not "substantially lessen competition," beating back concerns raised by consumer groups and an intense lobbying campaign from broadcast radio operators.

"The evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons," the Justice Department said in a statement.

The proposed deal--an all-stock deal now valued at $5 billion--still awaits a decision from the Federal Communications Commission, which had warned that the companies had high hurdles to surmount before gaining approval.

That's because in 1997, the FCC adopted an order prohibiting such a merger when it would result in only one operator controlling all satellite radio spectrum. The commission has asked for comments from the public about whether to waive or modify that rule, and FCC Chairman Kevin Martin said last week that a decision is getting closer.

XM and Sirius shareholders approved the merger in November.

XM and Sirius issued a statement acknowledging the Justice Department's decision but did not immediately comment further.

The companies have argued in various regulatory venues over the past year that the deal would not result in increased prices for subscribers and that, in fact, it would actually produce more programming choices, such as options to buy themed bundles of channels that are cheaper than either company's existing packages. Sirius CEO Mel Karmazin argued that those changes would be possible in large part because of "efficiencies" gained through merging the companies.

Consumers would also, in theory, be able to hear programming that's specific to one service--such as Howard Stern on Sirius and Oprah on XM--without having to purchase a new radio, if the companies merge.

At the moment, accessing channels offered by both satellite radio providers--for instance, Howard Stern on Sirius or Oprah on XM--requires a separate $12.95 monthly subscription and receiver for each company. If the deal is approved, company executives have said subscribers will be able to access channels from both XM's and Sirius's lineups without purchasing new radios, and that prices for either service won't climb above the $12.95 rate currently charged.

Under a post-merger pricing plan revealed last summer, consumers would also have numerous other options, ranging from a 50-channel "a la carte" package costing $6.99 per month, to a 180-channel bundle of combined XM and Sirius offerings for $25.90 per month. But to subscribe to the new "a la carte" channel packages, consumers would have to buy new radio receivers capable of processing those requests, which would reportedly cost the same amount as existing receivers (ranging from about $50 to more than $200).

Consumer advocacy groups, such as the Consumers Union and the Consumer Federation of America, had questioned whether consumers will really be able to take advantage of those promised benefits without incurring new costs.

Christopher Murray, senior counsel to Consumers Union, told CNET News.com on Monday: "The result for consumers is likely to be higher prices, more advertising on pay radio, and fewer choices for programming. This is an unthinkable and disappointing result. Let's hope the FCC does a better job in reviewing this deal."

National Association of Broadcasters Executive Vice President Dennis Wharton said the organization was "astonished" that the Justice Department had signed off on the deal.

Monopoly or not?
One key question facing antitrust officials was whether a combined XM-Sirius entity would constitute a monopoly. The politically powerful National Association of Broadcasters and radio conglomerate Clear Channel Communications had argued that would be the case and that the deal should be thrown out. XM and Sirius contended that satellite radio should be viewed not in a market by itself, but in competition with traditional and Internet-based radio services.

In reaching its conclusion, the Justice Department sided with the satellite radio operators' interpretations. Because of the existence of "a variety of other sources of audio entertainment, including traditional AM/FM radio, HD Radio, MP3 players (e.g., iPods), and audio offerings delivered through wireless telephones," along with whatever "next generation" audio-delivering technology may emerge, the antitrust overseers said they found no evidence that the satellite radio operators would be tempted to raise prices.

The Justice Department also argued that there has never been "significant" competition among the satellite providers because "customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider's signal." Moreover, the companies have begun entering into long-term contracts with car manufacturers to provide their services, which means there's no evidence that there will be competition between the companies on that front "for many years," the Justice Department said.

More than 70 members of Congress from both political parties had also urged that the deal be shot down, arguing that it was contrary to the public interest. Democratic congressional leaders were quick to criticize the Justice Department's ruling on Monday and to vow more oversight.

"We believe the elimination of competition between XM and Sirius is contrary to antitrust law and the interests of consumers," Sen. Herb Kohl (D-Wis.), the chairman of the U.S. Senate's antitrust panel, said in a statement. "We urge that the FCC find the merger contrary to the public interest and exercise its authority to block it."

Rep. Edward Markey (D-Mass.), chairman of a House of Representatives telecommunications and Internet panel that oversees the FCC, urged the regulators, if they approve the deal, "to appropriately condition any such approval to ensure consumer welfare with respect to long-term service plans and pricing as well as equipment compatibility and pricing."