Sirius and XM to merge according to an article in CNN MoneyWatch. Both companies are disappointed in their stock value and believe there will be value in a merger.
Here is my prediction for the future of satellite radio. Satellite radio has a limited future. I believe there is money to be made in it during the next five to ten years. I believe it will grow for the next five to ten years and then begin a decline.
What I believe will be it’s replacement is a new form of terrestrial radio which will be the result of IP radio combined with WiMax wireless broadband. The reason for this is one of simple economics. Broadcasting via satellite is tremendously expensive, terrestrial radio is dirt cheap. Conventional terrestrial radio lacks variety, particularly recently with a handful of giant corporations owing the majority of broadcast stations. Conventional terrestrial radio also lacks broad coverage and high quality audio for the most part.
The marriage of WiMAX and IP radio will address both these issues. It will become possible to listen to any IP radio station anywhere there is WiMAX coverage which I predict will eventually be essentially everywhere.
Presently there is a technical issue preventing this from being a reality and that is that presently IP radio is sent using UDP which has no delivery guarantee mechanism and the protocols used to send it themselves lack delivery guarantee and retransmission capability.
WiMax, presently is much like WiFi with longer range, will eventually be adapted to something resembling IP cellular service. This may be a completely de-facto adaptation with receivers adapting a strategy of seeking multiple connections and using the best at any given location.
The switch-over though will always involve interruption however momentary with packet loss, and a resulting interruption in audio. But as more people start using it that way, someone will adapt or create a protocol that includes error detection and retransmission for IP radio, and as soon as that happens commercial receivers incorporating WiMAX and IP radio in a user friendly box will emerge.
As soon as that happens, any incentive to switch to satellite radio will be largely lost owing to the much larger variety of programming material an lack of fees that WiMAX / IP radio will provide.
I expect this will occur within five years, but because people with investments in existing hardware or who enjoy programming on satellite radio that they’ve become accustomed to will continue listening, I don’t expect the satellite market to die for at least another five years after that but I do expect it will be on the decline.