XM SATELLITE (XMSR)

[trade2much]

IMHO It's going North within 6 months. Now a trading range of 11-14

CARANDDRIVER.COM, MAY 2002 MAGAZINE EDITIONA

Is Satellite Radio the Next Big Thing?
Or will it go the way of highway hi-fi, quadraphonic eight-track, and AM stereo?
BY FRANK MARKUS
MAY 2002

http://www.caranddriver.com/xp/Caranddriver/features/2002/may/200205_feature_satellite_radio.xml



It's described as cable for your car, promising 100 channels of CD-quality digital music, variety, and
talk programming beamed seamlessly into your car, anywhere in the continental U.S. The music
variety is infinitely broader than the bland, homogeneous, focus-grouped pap that fills the
corporate-owned FM airwaves today. You can hear the "F" word, just as on cable TV, but parents
can also block adult content. And the technology promises to deliver even more and different kinds
of personalized messaging and infotainment in the future. For a monthly fee of $10 to $13.

Sound heaven sent? Well, it is beamed from the heavens, just like that couch-potato godsend known
as satellite television. Its purveyors—two rival satellite-radio upstarts—have bet well over a billion
dollars each that a nation of commuters, road trippers, long-haul truckers, and would-be "car
potatoes" would be willing to pony up for 100 channels of audio variety.
We're talking about Digital Audio Radio Service (DARS), which is broadcast over a narrow slice of
spectrum along the S-band from 2320-2345 MHz. The Federal Communications Commission earmarked
these airwaves for DARS in 1992, got around to auctioning them off five years later, and now, 10
years later, the top bidders—XM ($89.9 million) and Sirius ($83.3 million)—are open for business,
offering two strikingly dissimilar broadcasting technologies and philosophies. Let's start with the tech.


The basics are pretty simple. Programming is beamed directly at the satellites via X-band (7025-7075
MHz), converted to S-band, and beamed back at a target area that includes the continental U.S.
plus a couple hundred miles. Unlike local FM radio waves, the distant DARS signal cannot penetrate
buildings, tunnels, heavy tree coverage, and the like. To minimize gaps in coverage, each company
uses two satellites broadcasting identical information over slightly different frequencies so that if the
signal from one is blocked, the receiver can continue playing the signal from the other. Satellite
radios also buffer four seconds of programming to prevent brief lapses when driving under bridges and
the like. To fill in long gaps in tunnels and urban canyons where neither satellite is in view,
ground-based repeater stations receive and rebroadcast the satellite's signal over a third frequency
range. Satellite-subscribed vehicles are equipped with a small antenna and a processor that
combines the signals and decodes the digital channels for playback.

Now for the differences. XM employs two satellites (dubbed "Rock" and "Roll") that are parked in
geostationary orbit about 22,500 miles above the equator. Rock orbits roughly in line with Atlanta,
Roll is due south of Las Vegas. This type of orbit allows the Directv satellite dish on your roof to be
aimed at a particular spot in the sky and left alone. Ground-based repeaters receive their incoming
signal in exactly the same way, so the geostationary orbit makes for cheap, simple repeater stations.


But there is a downside. The equator is way down south, which means the incoming signals
arrive at a pretty shallow angle, (kind of like the sun's rays in winter). In Seattle, the signal beam
comes in just 35 degrees above the horizon and can therefore be easily blocked by mundane things
such as a tall truck in the next lane. For that reason XM will install upwards of 1000 signal repeaters
in 75 markets.Sirius diminishes the low-angle problem by placing three satellites in a very high
elliptical orbit that peaks 29,000 miles above central Canada. This orbit means the satellites are
always moving relative to the earth, but each is in view of the U.S. for 16 hours a day, and two are
in view at all times. As a result, the incoming signal always arrives from a higher angle in the sky,
making it harder to block—like summer sunshine.
Moving satellites pose a problem for the ground repeater network. Motorized antennas that track the
satellites are used for beaming the signal up, but it would be prohibitively expensive to use similar
antennas for all the ground repeaters. Omnidirectional antennas don't work because they can be
overpowered by the rebroadcast signal. So Sirius buys time on other geostationary communications
satellites in order to beam content (over the Ku-band) to its network of about 90 fixed-dish
repeaters in 56 markets.

Sirius also claims that its fancier broadcasting system permits better quality by continuously varying
the amount of bandwidth used for each station. In other words, a channel broadcasting a
symphony's grand finale is allotted more bits of data to ensure full sound quality, but when the
announcer comes on to deconstruct the performance, the data stream shrinks, freeing up bandwidth
for another channel.

The XM and Sirius strategies for pricing and programming have also diverged in recent years. Five
years ago both companies were touting 100 commercial-free stations for $10 a month. Economic
woes and growing pains have conspired to break that promise. XM stuck to its $9.95 price but
introduced commercial programming—and rather a lot of it. Only 34 of XM's 69 music channels and
two of its 31 talk and variety offerings are free of huckstering. To be fair, however, XM's commercial
time is way below the 21 minutes per hour many FM stations carry.
Sirius remains commercial-free on all 60 of its music channels and seven of its news stations, but
that cleaner air costs $12.95 a month. See our sidebar on XM's programming content, and stay
tuned for more on Sirius, which was only launching its service in select markets as we went to press
but should be widely available this summer.

Which to choose? If you're buying a new car, the decision will probably be made for you, as most
manufacturers have lined up under one or the other of the satellite providers. (For now, no single
radio can process both signals, although such a radio is in the works.) GM was first to market last fall
with XM, offering it as a $295 option on Cadillac DeVilles and Sevilles. This fall, XM will be available
on 23 models across GM's domestic lines. Honda, Suzuki, Isuzu, and Peterbilt are also aligned with
XM. Betting on Sirius are the DaimlerChrysler and Ford brand families, BMW, and Sterling heavy
trucks. Porsche and Freightliner will sell both services. Most will offer deals to roll the monthly fee
into the lease or loan payment.

Detroit's Big Three have each invested between $20 million and $100 million in their respective
satellite providers. GM has announced that its investment reserves the right to use some of the
available bandwidth to reach its customers directly and provide service reminders, end-of-lease
offers, recall notices, even on-demand information or entertainment (imagine pay-per-listen audio
books or National Park tours). Sirius claims to have similar capability.

For those who can't wait until the next new-car purchase to join the digital-audio era, converters
are becoming widely available at Best Buy and other electronics retailers (see Pioneer sidebar),
selling for between $350 and $400.
So is it the Next Big Thing? For long-haul truckers, satellite radio seems like a must-have, and indeed
both companies offer dedicated trucker channels. Similarly, folks living within earshot of only a
handful of broadcast stations will revel in the instant variety. Serious audiophiles with wide-ranging
musical interests will find much to love with either service, as practically every musical taste is
catered to, with one glaring omission: Neither firm offers Hawaiian music. Trust us, nothing
attenuates road rage like a hip-swiveling hula tune. And traffic-frayed nerves may be a problem for
satellite radio commuters. There is currently no way to get local traffic and weather info on satellite
radio. City commuters addicted to National Public Radio's Morning Edition and All Things Considered
programs will also be disappointed. Although Sirius broadcasts two NPR stations, neither will carry
these rush-hour favorites, and the other news options can't compare.

There are a few potential bugaboos. XM has announced that the power supplies in its satellites seem
to be discharging more quickly than anticipated, which could necessitate their early replacement.
Potential S-band interference from an efficient new microwave-based light bulb intended for street
lamps and from ultra-wide-band radar and collision-avoidance systems threatens to interrupt service
in the years to come. And the wireless industry is after the satellite radio folks to reduce the power
of ground repeaters they claim will interfere with future cellular equipment.
Still, industry cheerleaders peg the expected market at 45 million to 55 million people, and analysts
reckon XM and Sirius will break even if four million subscribers each find the service worth the price
of one cheap CD per month. 'Fess up: Did you get a whole month's worth of pleasure out of your last
CD? We think satellite radio's here to stay.

What About the Rest of the World?
As XM and Sirius spar in North America, Washington, D.C.-based WorldSpace plans to cover most of
the rest of the world using three geostationary satellites parked over Africa, Indonesia, and soon
South America and broadcasting over the L-band (1467-1492 MHz). Along with about 40 channels of
radio programming in multiple languages, WorldSpace provides limited Internet access and data
transmission. With no ground-based repeaters, this service is intended for stationary users only, but
the potential audience is estimated at 4.6 billion.

Free Radio Strikes Back!
How will AM and FM stations compete with all the new digital listening options? With In-Band
On-Channel (IBOC) digital broadcasting, set for launch in 2003. The idea is to take the AM or FM
spectrum that's currently allotted to a station and divide it three ways, with an analog signal in the
middle, surrounded by two digital side bands. Only new radios will be able to play the digital signal,
but old ones will continue to work, too. The end game is fully digital service, but the analog signal
won't disappear until 85 percent of all radios are IBOC capable.

Putting XM Radio to the Road-Trip Test

To get a real feel for XM radio's continuity of coverage, ease of use, and programming quality, we
took an XM-equipped Cadillac DTS on a 2500-mile drive, circling from Detroit down through Memphis,
Tallahassee, Atlanta, Cincinnati, and back home. We listened to each and every channel and wrote a
brief review of each station's content.

In general, we found much to like, especially on the commercial-free music stations, most of which
sprinkle valuable commentary and thematic sound bites in among the musical offerings. For example,
the '70s music station plays marvelous Archie Bunker one-liners, Nixon Watergate testimony, and
sit-com theme-song snippets to set the mood. Jazz fans will adore the six channels that segregate
traditional, contemporary, and modern jazz with programming oversight from Wynton Marsalis. One of
the more intriguing rock stations is devoted exclusively to new, unsigned talent. Among the "world"
listings are stations broadcast in Hindi and Mandarin Chinese—mighty hard to find this stuff on FM.
We found less joy in the news channels, where many of the syndicated offerings tended toward
short-attention-span, inch-deep/inch-wide coverage. Of these, Fox News is hands-down the worst.
It's an audio feed from the cable-TV channel, so there are frequent and aggravating references to
things the viewers are seeing. BBC World Service was our favorite news channel, but its intense
European focus eventually resulted in drooling boredom. At that point, a dose of XM Comedy or
Laugh USA always brought us around.

As a road-trip companion, the XM programming was terrific. We defy anyone to tune in every
channel and conclude that there's nothing worth listening to. On the open road, we experienced few
gaps in transmission (a five-minute interruption occurred in the middle of Alabama, when the XM
system went down briefly). In town was another story. Ann Arbor's 10-to-20-story skyscratchers
stymied it often, as did the north-facing overhang in front of Tallahassee's airport. Commuting
through a concrete-canyon expressway in Detroit also presented several brief lapses in coverage.
Our Cadillac used a carryover radio adapted for XM, and as such the ergonomics suffered. With 100
channels of programming, the ability to tune a station directly (by pressing 1-4-4 for NASCAR Radio,
for example) should be considered vital, but this requires a 10-key pad, and Cadillac's has only six (to
which 18 XM station presets can be assigned). Station tuning is therefore done by skipping between
genres (Kids, News, Sports, etc.) until you get to the one you want, then seeking up or down the
channel listing within that subgroup. Sounds easy enough, but the unit doesn't seek instantly as it
does with AM and FM. Rather, it seems to need a second or two to establish a lock on one station
before allowing a jump to the next, which makes tuning a time-consuming chore. Finally, the
Cadillac's 16-character readout does not scroll text, so many artists' names and titles are truncated.
At least OnStar's new "virtual adviser" can provide traffic, weather, and news in major markets in
response to simple voice commands.

Most of our reasonably minor complaints with the system will likely be addressed quickly as newer
radios are designed and additional ground-repeater stations installed. These are, after all, the
frontier days of satellite radio.
Bringing Your Car into the Satellite Age

Our very first taste of XM radio came in a rented Chevy equipped by Pioneer Electronics with a $250
GEX-FM903XM aftermarket XM radio converter and a $100 AN-90XM magnet-mount antenna. (Best
Buy charges another $90 to install this system.) The converter mounts beneath the driver's seat and
rebroadcasts XM content over the original stereo at low power on an unused FM channel. A small
faceplate affixed to the dash is used to tune XM stations and display the first 10 characters' worth
of artist and title information.

This digital-to-analog setup theoretically degrades the sound quality, but we were impressed with
the audio fidelity. Owners of Pioneer aftermarket radios dating back to 1994 can hook up an XM
receiver unit through the input for a CD changer and control XM from their existing head unit, and of
course all new Pioneer stereos are XM-upgradable. Other manufacturers offer units that will play
back through a cassette-tape adapter, and Sony offers one that can be removed from the car and
docked in the house (using a second, outdoor-mount home antenna) to help take full advantage of
the subscription price.

The tiny head unit mounted in our Chevy provides four tuning buttons arranged in a circle for
navigating between genres (left and right) and then between stations (up and down). They were
easier to use than the Cadillac's widely spaced tuning buttons, but with only six preset buttons
(providing 18 presets), direct station tuning is impossible. (As yet, no aftermarket XM radio offers 10
buttons for tuning by station number.)
We only used the Pioneer system in town and found that it dropped the signal in exactly the same
spots as did our factory-equipped XM Cadillac. For the gotta-have-it-first crowd, this seems a great
way to tune in to satellite radio.


Web Exclusive

We listened to every channel so you won't have to. Click on the image above for our capsule reviews
of all 100 stations.