FCC May Be Near Decision on Merger Of Sirius and XM

The FCC is under pressure from some on Capitol Hill to put restrictions on a merger of the satellite radio companies.

By Cecilia Kang
Washington Post Staff Writer
Saturday, May 24, 2008; D01

Federal Communications Commission Chairman Kevin J. Martin said yesterday that the agency could reach a decision on the proposed merger between Sirius Satellite Radio and XM Satellite Radio Holdings by the end of June.

For XM and Sirius, the FCC's scrutiny is the last regulatory hurdle in the way of the long-delayed proposed merger of the nation's only two satellite radio providers. The deal has drawn criticism from consumer groups and federal and state lawmakers who say consolidation of the satellite radio industry would leave consumers with fewer choices and, possibly, higher prices.

At a news conference, Martin said that a decision on the merger isn't on the agenda of the agency's open monthly meeting for June, but he added: "I still think the commission could act by the end of the second quarter."

Earlier in the week, Sens. Olympia J. Snowe (R-Maine) and Claire McCaskill (D-Mo.) sent a letter to Martin saying that if the merger is approved, the agency should require the combined company to return some of the radio spectrum it occupies so it can be reallocated to competitors. They also called on the FCC to require that the merged company make its service open to all manufacturers of satellite radio players. They are among dozens of lawmakers who have criticized the merger and pressured Martin to reject it or approve it with strict conditions.

"We are concerned that this merger could possibly undermine competition and harm the consumer if certain conditions are not applied," Snowe and McCaskill said in the letter.

Public interest groups have asked the FCC to impose other conditions, as well, such as allowing customers to buy certain channels rather than the entire service and promising not to raise prices for the combined programming package for at least three years.

XM, of the District, and Sirius, based in New York, successfully argued against antitrust concerns raised by the Justice Department, saying they must compete not just with each other, but with a broad variety of entertainment options, including iPods, terrestrial radio and Internet radio. The department approved the merger in March.

The FCC almost always moves in step with the Justice Department on merger decisions. It is, however, in an awkward position: Lawmakers such as John D. Dingell, a Michigan Democrat and chairman of the House Commerce Committee, have raised concerns about the merger, and the FCC granted spectrum licenses to XM and Sirius in 1997 with the condition that they never merge.

Separately, Martin said yesterday that the FCC would hold a hearing June 12 on the penalties that wireless carriers charge customers who cancel their cellphone contracts before they are due. The hearing would include wireless carriers and such public interest groups as Consumers Union and AARP, he said.

Carriers such as Verizon Wireless, AT&T and Sprint Nextel routinely charge customers $150 to $200 for canceling their services early, which has sparked several lawsuits.

Early termination fees were among the five most common complaints by cellphone users, who filed 20,300 service-related complaints in 2007, according to the FCC.

Martin said he supported a "national framework" to regulate the early termination fees and has been meeting lately with a major wireless carrier on the issue. He didn't say, however, whether such a policy would protect wireless carriers from litigation in state courts, something the carriers have been pushing.

The industry is starting to respond to the demands of consumers. Tomorrow, AT&T will begin a gradual payment plan for customers who cancel their contracts early. Instead of paying their $175 fee upfront, the subscriber will pay $5 each month for the remaining months on the contract.