Space invaders

What happens if new satellite radio services start transmitting a whole lot more than audio?

ERIC REGULY

From Friday's Globe and Mail

Every decade or so, a new consumer technology hits the market and becomes an overnight sensation. The DVD, the cellphone, the digital camera and the iPod are ubiquitous. The BlackBerry is on its way.

Next up is satellite radio. It, too, is a sales phenomenon—but it's also much more than that. Because its satellites can zap video and data streams, as well as audio, to mobile devices, satellite radio has the potential to shake up the conventional media and telecommunications industries like nothing before. As if companies like Bell Canada and Rogers Communications needed more to worry about.

Our homes are saturated with entertainment and communications contraptions. What we want now is an all-in-one mobile gizmo that can perform a variety of duties quickly, reliably and cheaply. Some portable gadgets already have multiple uses. The cellphone has morphed into a camera, a messaging service and a primitive internet-access device. The BlackBerry works superbly for phone calls and e-mail. But so far there has been nothing that can keep you in touch with the world and entertained in any way you choose while riding in the back of a car or waiting in line for pizza. Enter satellite radio. More precisely, enter the technology behind satellite radio.

In the United States, "sat rad," as it is called, is the fastest-growing consumer electronics product since the DVD. The two main companies, XM and Sirius, expect to have more than eight million paid subscribers by the end of the year. Cars are the first target market. Vehicles with sat rad receivers can already get more than 120 music and talk channels, most commercial-free, anywhere in the country for about $13 (U.S.) a month.

Now, Sirius and XM are on their way to Canada, partnered with local investors and media. In June, the CRTC granted licences to Sirius Canada Inc. and Canadian Satellite Radio. Both expect to be offering the full American menu plus eight or so Canadian channels by the end of the year or soon thereafter. The satellites are already in orbit, and they have enormous capacity and can transmit information to virtually any kind of digital device. "A year ago, we wrote on a board all the things we could do with the platform and we ran out of space in an hour," says Mike Ledford, Sirius's chief technical officer.

So what are those uses? The back seats of America's cars—200 million or so—are the equivalent of undeveloped beachfront property. A Sirius or XM receiver in the dashboard could be tweaked to deliver a video signal to the monitor behind Mom and Dad. That technology has been demonstrated, and XM and Sirius are talking to content providers about cartoons and other programs for the brat crowd. Sirius plans to offer up to four video channels by the end of next year. More could come, possibly including first-run movie channels. Imagine that XM or Sirius invent a portable audio-video device or install receivers in PCs. You arrive at the cottage, yank the thing out of the back seat and plunk it in the kids' room. Goodbye, Bell ExpressVu or Star Choice. Why pay twice for satellite TV service? Or for cable?

We're just getting started here. Sports scores, sports video and weather are natural add-on services, as are on-board navigation systems. Satellites can already provide real-time traffic information. In future, they could direct you to the least-congested routes. The satellites could also perform some functions of GM's OnStar, such as remote door unlocking. (Don't be surprised if OnStar and XM, GM's sat rad supplier, merge in five or 10 years.) How about using satellite signals to reprogram a faulty computer chip in your car?

The satellites have one big drawback. They are not interactive—your receiver can't send signals back to the satellite. This means XM and Sirius can't offer phone service. But they can provide video content to phone companies. Sirius says it will soon deliver music channels to Sprint's mobile-phone customers (reportedly starting with 20 channels). Sirius boss Mel Karmazin, who is Viacom's former CEO, has also talked about delivering Sirius music to a future version of Apple's iPod.

Sending satellite video channels to mobile phones might be next. If that happens, the all-in-one portable entertainment and communications gadget gets even closer to reality. A device like this would be both a threat and an opportunity to Canada's phone and media companies. Bell Canada, Telus, Alliance Atlantis and Corus could form content and phone-service partnerships with the satellite companies, subject to regulatory approval. If they don't, someone else almost certainly will, thereby snatching the type of mass-market opportunity—and growth story for investors—that translates into consumer revolutions.

Eric Reguly is an award-winning columnist with The Globe and Mail.

 

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