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Future of satellite radio is still up in the air

The signals are coming from space, but is anyone listening?

In late September, XM Satellite Radio began broadcasting its service — 100 channels of music, talks and sports, with few commercials — in the Dallas and San Diego areas, to subscribers who have aftermarket radios in their vehicles. The broadcasts will be nationwide by November, the Washington, D.C., company says.

General Motors will be the first automaker to offer XM’s service, in the 2002 Cadillac DeVille and Seville in November. Next fall GM plans to extend the option to more than 20 of its 2003 models.

But as XM CEO Hugh Panero was turning on the service, he scaled back estimates of the size of the customer base by the end of this year to 50,000, half the company’s prediction of last spring.

The economic aftershocks from the terrorist attacks Sept. 11 had analysts questioning how many people would be willing to pay $200 or more for the special satellite receivers, plus a monthly fee, as opposed to the free service of traditional commercial radio.

“This is a tough concept after 80 years of free radio,’’ Gary Arlen, president of Arlen Com-

munications, a media research firm in Bethesda, Md., told Bloomberg News Service. “If it catches on, it will take much longer than the companies expect.”

XM’s subscribers will pay $9.99 per month. XM subscribers who have General Motors Acceptance Corp. leases will be able to add the fee to their lease payments. Rival company Sirius Satellite Radio Inc. of New York charges $12.95 per month.

Honda also has signed to offer XM service but hasn’t disclosed its implementation plans.

Sirius, which counts Ford Motor Co. and DaimlerChrysler among its customers, is running test broadcasts, and expects to have aftermarket receivers in stores by year end.

BMW plans to offer Sirius receivers in its vehicles next year, but has not set a launch date.

“It may debut in one specific model, but expect to see it available in the complete model line,” said Jonas Mussona, a BMW spokesman.

Porsche Cars North America will offer XM and Sirius service in its 2004 models. The automaker is required by the Federal Com-

munications Commission to offer both XM and Sirius because it did not establish a satellite radio partnership prior to February 2000.

Ford and DaimlerChrysler, both investors in Sirius, established their partnerships prior to February 2000, which gives them the option of offering Sirius exclusively. Since radios that can accept both XM and Sirius signals are not ready, automakers that can offer only one satellite radio service can come to market faster.

DaimlerChrysler will introduce Sirius as an option during the 2002 model year, said a spokesperson for the automaker. The automaker has not disclosed which vehicles will have the satellite radio option.

Ford has not announced a launch date.

XM will have commercials on some of its music channels, but Sirius says it will keep its music channels commercial-free. Most of Sirius’ nonmusic channels will have four to six minutes of commercials per hour. Standard radio averages about 18 to 22 minutes of commercials per hour, says Mindy Kramer, Sirius spokeswoman.

Bloomberg News Service contributed to this report

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