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Running Head: Satellite Radio Introduction Satellite radio is a more advanced substitute to terrestrial-based services. The choice of capturing radio frequencies via satellite involvement allows access to a mobile radio service. Satellite radio functions with the help of fixed-location receivers, dish antennas and signal repeaters. These commercial investments permit the listeners to enjoy hands-free communication over immense geographical areas. It provides coverage around tall buildings and bridges, in any weather, without the slightest interruption unlike terrestrial. The dish antennas and signal repeaters are invested in and set-up by the providers of the technology, to make signals or frequencies more available to listeners within a set range. Background Digital Audio Radio Service (DARS) was launched by the Federal Communications Commission (FCC) in 1992 by creating specific segments of radio frequency for satellite broadcast on radio. An auction was later held for the buying of these particular radio frequencies and two companies were awarded the license to use them. American Mobile Radio (soon after became XM Radio) acquired their licensing at the cost of $93 million, and CD Radio (soon after became Sirius Satellite Radio) at the cost of $89 million; both valid for 8 years. The estimated launch cost for a satellite service is approximately $1.5 billion. In the spring of 2001, XM Radio successfully launched its first two broadcast satellites: “Rock” and “Roll”. In September 2001, XM began the first US digital satellite radio service in two markets: Dallas/Ft. Worth and San Diego. Two months later, XM Radio was launched nationwide. In February of 2002, Sirius launched its service in four markets: Denver, Houston, Phoenix, and Jackson, Mississippi. The nationwide launch was complete during the summer of 2002. Soon after their nationwide launch, each service has worked to generate subscribers.
Running Head: Satellite Radio At the end of 2004, XM Radio reports over 3.2 million users, and Sirius reached the 1 million subscriber level. XM Radio is traded on the NASDAQ (XMSR) with a current price of around $35, providing the company with a market cap of just over $7 billion. Sirius Satellite Radio is traded on the NASDAQ (SIRI) at a current price of around $7, giving the company a market cap of $9.5 billion. All the above statistics were provided by http://satelliteradiousa.com. Potential Benefits With the capacity to provide so many different channels, XM Satellite Radio has a wide variety of programming and a huge potential user base. As of 2006, XM Satellite Radio alone offered approximately 170 channels including: new channels, comedy channels, talk radio programming, sports programming, local weather and traffic conditions for 21 major metropolitan markets plus several interstate corridors nationwide, children’s programming, original programming hosted by music legends, women’s programming, Hispanic programming, etc. In addition to the wide range of programming, satellite radio makes...