Satellite Radio Racial Set-Asides Under Fire

Published June 1, 2009

The Federal Communications Commission has extended the deadline of its mandate requiring Sirius XM satellite radio to lease part of its spectrum to minority programmers.

Technology experts are urging FCC to abandon the requirement altogether, arguing the “set aside” is unfair and would further damage the already-struggling company.

To help convince FCC to approve the merger in 2008, Sirius XM agreed to set aside 8 percent of its spectrum for firms owned by African-Americans, Hispanics, Asians, or American Indians. The agency put itself in charge of awarding the set-asides and demanded Sirius XM lease the channels free of charge.

FCC originally set a deadline of November 2008 for establishing the set-asides but has since extended the deadline to May 29.

Opposing the Mandate
Kenneth Ferree, president of the Washington, DC-based Progress and Freedom Foundation, spoke out strongly against the mandated set-aside at an FCC public comment session on the issue in April.

“First, the commission should not define the entity or entities eligible for third-party access to the Sirius-XM platform based on race or ethnicity,” Ferree said. “Second, the management of Sirius XM should have a substantial role in the ultimate selection of those to whom the set-aside channels will be awarded.

“If Sirius XM were truly interested in voluntarily setting aside its capacity for third-party access, it would not have been necessary for the FCC to condition approval of the merger upon the company’s agreement to do so,” Ferree added. “The commission has determined that Sirius XM should have no involvement in the selection of the programmers who will be granted access to its platform by force of the set-aside.

“As a result, the combined entity may be required to carry programmers whose content or viewpoints are offensive to Sirius XM or inconsistent with other programming on the platform,” Ferree said.

‘Bleakest Time’ for Mandates
Cord Blomquist, senior communications director and information policy analyst at the Competitive Enterprise Institute in Washington, DC, said FCC’s micromanagement of Sirius XM could not come at a worse time.

“Satellite radio is probably facing the bleakest time in its short-lived history, and part of it is because XM and Sirius bled so much money for so long buying talent like Oprah and Howard Stern,” Blomquist said. “Their merger was held up for about a year and a half by the FCC and Federal Trade Commission.

“They’re in really horrible shape, and I think any additional sacrifices asked from them are unreasonable,” Blomquist said. “They need all the help they can get to remain financially solvent so we can have satellite radio at all.”

Adding ‘Insult to Injury’
Blomquist said there is a danger of satellite radio becoming obsolete while Sirius XM tries to survive and accede to FCC’s set-aside requirement.

“These demands and restrictions saying they should give so much to public access or minority programming are adding insult to injury,” Blomquist said. “It’s likely we won’t have satellite radio at all in a few years, so this fear that otherwise they’ll monopolize it isn’t justified at all.”

No One Disenfranchised
Blomquist said FCC is forgetting modern technology allows almost anyone to create media today, and it shouldn’t regulate media as if old-fashioned scarcity rules still apply.

The modern technological landscape, Blomquist said, ensures no one is ever really disenfranchised. If you can create compelling content and have marketing skills, you can attract an audience.

“Anyone can buy a computer for a few thousand dollars, get started, and broadcast to the masses,” Blomquist said. “Seemingly, people who produce good content can produce for pennies on a dollar. These arguments [promoted by FCC] that we need to lower the [barriers to entry] and [add] regulations don’t make much sense.”

Krystle Russin ([email protected]) writes from Texas.