Satellite Radio TechWorld

FCC Adopts Rules Governing WCS and Satellite Radio

2010-06-11T16:42:00.004-05:00

The saga appears to be over. On May 20, 2010, the FCC issued its Report and Order and Second Report and Order on the rules governing the Wireless Communication Services (WCS) and the Rules and Policies for Satellite Radio. We noticed today that Sirius XM has withdraw its applications for repeaters. Presumably, this is because it now has (or will soon have) the coveted blanket authority to set up repeaters up to 12 KW. That means that within the parameters of the report and order, Sirius XM is now free to establish repeaters wherever it wants without the burden of having the FCC approve each application. It still has to fill out the applications and state the maximum number of repeaters, and the FCC still has the discretion to disallow the maximum number of repeaters, so the authority is not unlimited.

It does mean, however, that the WCS will be operating around the satellite radio band and there could be some interference. Neither side seems to be particularly happy, so the rules must be reasonably balanced between allowing WCS to operate their services and satellite radio to tolerate some interference.

The rules are to take effect 30 days after publication in the federal register.

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And None for Liberty

2010-06-10T19:38:00.003-05:00

On June 04, 2010, AfriSpace Debtor in Possession (aka WorldSpace) filed an application with the FCC to transfer its two geostationary satellites to Yazmi USA. Yazmi is wholly own by-you guess it-Noah A. Samara, the founder of WorldSpace. Samara was also the principle of Yenura, who entered into an asset purchase agreement with AfriSpace Debtor in Possession. That agreement terminated in September 2009. That is when Liberty came in an attempted to purchase the claims of the previous lenders. In the process, Liberty provided a bridge loan of $7.3 million so that WorldSpace could continue to operate. As reported earlier, Liberty terminated its agreement with WorldSpace in March 2010. WorldSpace then filed for an emergency motion of the debtors for an order to approve the de-orbiting of the satellites or abandoning the assets. The de-orbiting plan was approved by the courts with a preference for selling the assets.

WorldSpace proceeded to invite two bids, Yazmi and an unknown bidder (not likely Liberty). Yazmi secured the assets for $5.5 million. Liberty can't be too happy about this. Nevertheless, the courts approved the sale. If the FCC approves, Samara will continue his legacy.

So, WorldSpace (and Samara) hangs to broadcast another day. Samara must have a plan. It is unlikely he has the personal resources to keep funding WorldSpace and there probably aren't lenders standing in line. Who knows. Perhaps Sirius XM will step in.

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Sirius XM to Launch Another Geostationary Satellite

2010-04-09T19:41:00.002-05:00

Sirius XM (aka Satellite CD Radio) applied for authority to launch another geostationary satellite (FM-6) to act as a backup to the previously launched geostationary satellite, FM-5. FM-5 , along with three NGO satellites, currently service the Sirius satellite radios. The XM side of the business has its own constellation.

The three NGO satellites were launched in 2000 and will be 12 years old when FM-6 becomes operational in 2012. The NGO satellites will be phased outs and FM-5 will be relocated to make the constellation nearly identical to the legacy XM constellation, allowing the integration of the two systems. The transmissions will be compatible with current of future generations of Sirius XM radios.

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And Liberty for None

2010-04-08T19:54:00.002-05:00

Liberty Satellite Radio, that is. If WorldSpace thought Liberty Media was bluffing when it terminated negotiations, it may be thinking differently now. In December of 2009, Liberty Media filed for a consent to acquire two satellites from AfriSpace, the Debtor in Possession of the satellites used for the WorldSpace service in India. The name of the company would have been Liberty Satellite Radio. Today, April 08, 2010, Liberty Media withdrew its request from the International Bureau of the FCC, officially ending its quest for world domination.

AfriSpace has threatened to decommission its satellites. We have not yet been unable to find any evidence that it has made any filings with the FCC to do so. Liberty may be calling AfriSpace's bluff.

Is it over? Doubtful. It's valuable spectrum, and if it is returned to the FCC, it will likely be a long time before it is used. No one wants that to happen. Keep watching. The saga continues.

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FCC Proposes Rules to Minimize Interference between SDARS and WCS

2010-04-08T18:09:00.005-05:00

In the biggest news event for satellite radio since the merger, the FCC has finally issued draft interference rules to limit interference between Satellite Digital Audio Service (SDARS, aka Satellite Radio) and the Wireless Communication Services (WCS). A bitter battle between the two services has ensued for years as the WCS providers have been trying to take advantage of the frequencies on either side of the satellite radio band.

The proposed rules will finally give clarity to the repeater issues. Sirius XM will finally get the coveted blanket authority to operate repeaters under a certain power level. It will also give SDARS a 2.5 MHz guardband to protect against interference to the satellite radio service.

The WCS providers will finally be able to make use of its valuable frequency. Unfortunately for SDARS, this frequency band once set aside for satellite radio will no longer be even a dream for satellite radio. Mobile internet users will benefit. Some SDARS repeaters may have to be altered or moved or decommissioned.

The saga has not ended quite yet. The FCC is requesting comments on the proposed rules. The comment period is short, only 2 weeks. Sirius XM has requested a 2 week extension. The WCS Coalition seems to be saying, "Let's get this over with". It is clearly not happy with the rules, but wants to move forward. It rightly accuses Sirius XM of delay tactics. No doubt, Sirius XM has legitimate reasons to fear interference from the WCS, but it could also have ulterior motives to make this frequency band worthless to all, except SDARS, of course. The Coalition believes Sirius XM is delaying because it will bring new competion:

"And, adoption of the new rules will subject Sirius XM to new competition from WCS-enabled mobile broadband that provides the public with mobile access to free services like Pandora, Slacker and a range of Internet radio services that largely duplicate, if not improve upon, Sirius XM’s offerings."

The statement clearly shows the animosity between the two services and the Coalition could not help be take a swipe at Sirius XM. In any case, Sirius XM will delay the rules to the bitter end. There is nothing to lose and everything to gain.

The rules please no one, so it must be a good balance between the two services. We say, "Let's get it over with and move on, Sirius XM."

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Sirius XM to Broadcast Earthquake Emergency Relief Channel in Haiti

2010-01-23T11:30:00.003-05:00

Sirius XM requested and received a Special Temporary Authority to broadcast a Haiti emergency relief information channel. The channel will be broadcast in Haiti by the newly launched FM-5 geostationary satellite. The channel is available free of charge, no activation required. The broadcast will either be in Creole language from the Voice of American or from a local radio station that has lost its ability to broadcast.

Sirius is working with the State Department to deliver 500 Sirius XM radios, plus boomboxes capable of operating from batteries. This might be a great way to make good use of satellite radios and boom boxes that are no longer in use, if there were means to collect, deliver, and distribute the radios.

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Satellite Radio Comes to Puerto Rico

2009-11-14T21:53:00.007-05:00

On October 23, 2009, Sirius XM filed an application with the FCC International Bureau to operate repeaters in Puerto Rico for 60 days. The FCC granted this application on November 05. Satellite Radio is coming to Puerto Rico alas! Sirius XM also filed an application for the standard 180 day license to operate repeaters in Puerto Rico on October 30. It is just a formality at this point.

For all those in Puerto Rico, the wait is over. Sit back and enjoy the music.

Edit: As expected, the FCC granted Sirius XM the standard 180 license to operate repeaters in Puerto Rico on December 10, 2009. The grant authorized two repeaters, one in San Juan and the other in Bayamon.

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XM Receives Grant to Launch and Operate XM5 an In-Orbit Spare

2009-09-04T15:16:00.003-05:00

XM Radio has applied for and has been granted permission to launch and operate XM-5 as an in-orbit spare. It will also include the Sirius Satellite Radio frequencies and will be able to serve as a spare for both systems. XM plans to launch in the first quarter of 2010.

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XM Seeks to Expand it Band of Frequencies

2009-03-30T17:03:00.004-05:00

XM, the wholly owned subsidiary of Sirius XM Radio, has filed an application to expand it range of frequencies to include the Sirius Satellite Radio band of frequencies. Previously, XM operated in the 2332.5-2345 MHz band, while Sirius operated in the 2320-2332.5. XM now seeks permission to operate over the entire satellite radion band from 2320 MHz to 2345 MHz. The stated purpose is to allow Sirius XM to design, test, and demonstate its terrestrial repeater network in order to optimize the network prior to deployment. Although the repeater networks operate in a different way, this could be the first step towards consolidating the two repeater networks. One also has to wonder if this could be a prelude to moving towards one satellite constellation.

Update: Application granted on May 14, 2009.

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XM Sirius Readies for Launch of Geostationary Satellite

2009-03-11T20:21:00.005-05:00

Sirius XM filed an application today with the FCC IB "to use the S- and X-band antennas on its Ellenwood, Georgia earth station (Call sign E080168) to provide launch and early orbit phase (“LEOP”) services to, and in orbit testing (“IOT”) of, its FM-5 satellite (call sign S2710)." The launch of its FM-5 geostationary satellite is scheduled to launch on June 29, 2009 into the 96 degree W.L. orbit. This will be the first geostationary satellite in the old Sirius constellation. The satellite will improve the reception of satellite radio in the US and Canada.

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Satellite Radio In Puerto Rico

2009-03-01T18:43:00.004-05:00

As many of you may have surmised, I have been away for a while. I still have a day job. The vast majority of my time has been spent in China over the past year or so. Anyway, this may be a bit of old news. When the merger between XM and Sirius was approved last year, one of the conditions was to bring satellite radio to Puerto Rico. In keeping with this condition, on October 27, 2008, Sirius XM filed an application to operate low powered repeaters (less than 2 KW) in Puerto Rico. These repeaters would be used to bring satellite radio to Puerto Rico, complete with repeaters to fill in the gaps. The FCC is yet to act on this application.

Twenty repeaters are currently planned as follows:

Westernbank World Plaza, 268 Munoz Rivera Avenue, San Juan, PR

Edificio Union Plaza, Avenue Ponce De Leon #416, San Juan, PR

Las Caramelitas, Avenue Ponce De Leon, San Juan, PR

Santa Anna Apartments, Villa Caparra, Avenue Luis Vgoreaux, Guaynabo, PR

PR Telephone Company, 1513 Avenue F.D. Roosevelt, Guaynabo, PR

Plaza Del Prado, CARR 833 Calle Los Filtros, Guaynabo, PR

Monserate Towers, Monserate Avenue I, Carolina, PR

Sona Industrial, Marginal Baldorioty De Castro B-24, Carolina PR

San Anton Apartments, Calle Roman Figueroa Castro, Carolina, PR

Riverside Plaza, 74 Calle Santa Cruz, Bayamon, PR

Torres del Parque, Avenue Federico Motilla 1700, Bayamon, PR

Caribe Hilton, 1 San Geronimo St., San Juan, PR

Pazada, # 2 Avenue De La Constitucion, San Juan, PR

Ashford Imperial, 1302 Ashford Avenue, Condado, San Juan, PR

Coral Beach I, 5859 Avenue Isla Verde, Carolina, PR

Condo Mundo Feliz, Calle Rodriguez Emma #1, Carolina, PR

Cooperativa De Viviendas, Torres De Carolina, Carolina, PR

PR Telephone Company, Power St, Ponce, PR

Condo El Mirador, Avenue University, Ponce, PR

Caguas Tower, Bonneville Terrace, Calle 2, Caguas, PR

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Sirius XM to Test New Modulators

2009-02-25T22:16:00.004-05:00

Earlier this month, Sirius XM filed for an experimental application to test new FM modulators. It plans to test up to 500 units nationwide. One has to wonder whether or not Sirius XM will seek volunteers to assist in this quest.

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XM Patent Application for Sending and Receiving Images

2008-05-29T17:39:00.003-05:00

Today, XM had a patent application published for a "System and method for sending and receiving images via wireless audio channels". The application applies not only to satellite radio but to all digital radio including HD Radio and Digital AM. It is not related to real time video. It appears that still images are captured from digital cameras or video recorders or other sources and encoded into the audio stream as 120 X 120 to 176 X 220 pixel images. The images are synchronized to the relevant audio to create a picture show.

The only question is, "What took you so long?" It seems like an obvious application and we thought it would have been done on the latest generation of the Stilleto.

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US Electronics Makes Commonsense Proposal

2008-05-27T17:39:00.003-05:00

Last week, US Electronics make a commonsense proposal on the open sourcing of satellite radio receivers. It is difficult to argue with this proposal or its benefits to consumers. Left to the merged entity, satellite radio will do what benefits satellite radio. With open sourcing, the consumer wins. Actually, it is not a bad deal for satellite radio either. It gets them out of the design of the satellite radio receivers and lets them focus on what they do best, producing great entertainment.

First, US Electronics proposes the following restrictions:

1. Sirius shall not directly or indirectly engage in the design, manufacture or distribution of satellite radio receivers.

2. Sirius shall not enter into exclusive agreements with any manufacturer, distributor, retailer, partner or auto manufacturer that limits the availability of hardware capable of receiving SDARS signal by consumers.

3. Sirius shall not participate in setting, influence or seek to influence, directly or indirectly, the retail price paid by consumers to acquire any satellite radio receiver or ancillary hardware used to support the operation of a satellite radio receiver except through mechanisms allowed pursuant to D.2., below.

All of these conditions are necessary for open sourcing to work. Next, US Electronics would require that satellite radio publish the technical requirements to use the satellite radio chipsets. Basic stuff. Manufacturers have got to know how to use the chipsets.

US Electronics also proposes to make any subsidies available on a non-discriminatory basis. Satellite radio would not be allowed to favor any manufacturer in any way. No manufacturer is at a disadvantage. Sales and marketing would also be made on a non-discriminatory basis.

Finally, although not specific on this point, they propose a means of monitoring and enforcing open sourcing. Without enforcement, the requirement has no bite. Whatever the means of enforcement, it must be better that the enforcement of the interoperable receivers, which never happened in any practical way.

We find little fault with this proposal and urge the Commission to accept it.

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Wistron-Neweb Unveils New Stratus 5 Radio

2008-05-20T16:56:00.002-05:00

Wistron-Neweb received certification for its new Stratus 5 Sirius Satellite Radio today (FCC ID NKRUPASV5). It has been a long while since we have seen a new receiver. We didn't expect to see any new radios until the merger decision was made. The receiver is strictly for the Sirius Satellite Radio signals and has NO provisions for receiving the XM signals.

User Manual
External Photos 1
External Photos 2
Internal Photos 1
Internal Photos 2

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Sirius' Application to Launch New Non-Geostationary Satellite Dismissed

2008-05-16T08:20:00.009-05:00

Yesterday, CD Radio's (aka Sirius Satellite Radio) application to launch a new non-geostationary satellite was dismissed. The reason for dismissal was because Sirius failed to provide adequate information for the end of life disposal of the satellite. Sirius can reapply. The Commission advised Sirius to provide the following information when it resubmits its application:

First, we ask that Satellite CD Radio provide additional information concerning its post-mission disposal plans for the FM-6 satellite as part of any future filing. As part of its current application, Satellite CD Radio proposes to dispose of the FM-6 satellite at end of life by circularizing the orbital altitude of the satellite to an operational perigee of approximately 46,325 kilometers.’ In any future filing, Satellite CD Radio should confirm the inclination of the disposal orbit, as well as provide any information it has supporting the long-term stability of the disposal orbit.

Second, space station antennas in the fixed-satellite service must be designed to provide a crosspolarization isolation such that the ratio of the on axis co-polar gain to the cross-polar gain of the antenna in the assigned frequency band shall be at least 30 dB within its primary coverage area.’ Although Satellite CD Radio states in its Attachment A to its application that the cross polarization isolation of the satellite feeder link receiver antenna will exceed 30 decibels (dB) within the -3 dB gain contour of the receive frequency, this value stated as 25 dB in its schedule S filling. We request that Satellite CD Radio confirm the actual cross-polar isolation of its antenna as part of any future filing.

Update: Sirius has since refiled: Narrative, Tech Description, Technical Supplement

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OT: Enforcement Bureau Issues Major Notices of Apparent Liability

2008-04-11T12:03:00.004-05:00

The Enforcement Bureau (EB) of the FCC has issued numerous high dollar notices of apparent liability (NAL) "for failure to place the required Consumer Alert label immediately adjacent to and clearly associated with television receiving equipment" warning them that certain TVs were analog only and would require converters after February 17, 2009. Here are some samples:

CompUSA $168,000
Fry's Electronics $384,000
Target $296,000
Best Buy $280,000
Circuit City $712,000
Wal-Mart/Sam's $992,000
Sears Roebuck $1,096,000

In addition, the EB hit numerous manufacturers with NALs for failure to comply with V-Chip requirements:

Polaroid $775,000
Proview Technology $300,000
Precor Incorporated $357,900
Syntax-Brillian $1,277,100

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OT: Commercial Mobile Alert System First Report and Order

2008-04-10T16:02:00.003-05:00

Yesterday, April 09, 2008, the FCC adopted the Commercial Mobile Alert System First Report and Order (CMAS First Report and Order). The purpose of the CMAS is to provide warning messages to the public on mobile devices, such as cell phones. At present, participation is voluntary. In its release today, the Commission described the system as follows:

Wireless carriers that choose to participate in the CMAS will transmit text-based alerts to their subscribers. As technology evolves, the CMAS may eventually include audio and video services to transmit emergency alerts to the public. To ensure that people with disabilities who subscribe to wireless services receive these emergency alerts, the FCC adopted rules that will require wireless carriers who participate in the CMAS to transmit messages with both vibration cadence and audio attention signals.

Consumers can expect to receive three types of messages via their cell phones and other mobile devices from participating wireless carriers, including:

· Presidential Alerts - national emergency-related alerts delivered to the American public that would preempt any other pending alerts;

· Imminent Threat Alerts - alerts with information on emergencies that may pose an imminent risk to people’s lives or well-being; and

· Child Abduction Emergency/AMBER Alerts - alerts related to missing or endangered children due to an abduction or runaway situation.

The participating wireless carriers will be required to comply with Order within 10 months after the Commission designates an agency to collect and transmit the alerts to the wireless carriers.

You can read the Report and Order at statements here:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A1.pdf
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A2.pdf
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A3.pdf
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A4.pdf
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A5.pdf
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-99A6.pdf

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Sirius to Launch New NGSO Satellite

2008-03-22T01:25:00.008-05:00

Sirius recently filed an application for authority to launch and operate a new non-geostationary orbit satellite (NGSO, FM-6). The satellite will replace TWO existing NGSO satellites (FM-1 and FM-2) that are currently in operation. FM-6 would be placed half way between the where FM-1 and FM-2 operate today. The launch is expected to take place in 2010. Sirius has already been granted authority to launch a geostationary satellite (FM-5). This will significantly alter its existing satellite constellation. It will eventually operate with two non geostationary satellites (FM-3, FM-6) and one geostationary satellite (FM-5). Sirius explains it as follows:

The enhanced geographic coverage anticipated from the successful launch of FM-5, coupled with satellite technology advancements included on FM-5 and FM-6, will allow Sirius to reduce its GSO constellation from three to two satellites.

FM-6 will have twice the transmit power of FM-1 and FM-2.

In the appplication, there is this little nugget of information concerning its overlay modulation currently used for backseat video:

The digital stream throughput is 1.35 Mb/s. The additional transmission capacity will be used for providing subscribers with more audio channel programming and data and is currently providing three compressed video channels primarily for vehicle back seat viewing. Each video is compressed to approximately 255kb/s.

This gives us some ideas on what we might see for the number of audio channels. Presently, music is compressed to 44 kbps; voice, 20 kbps; and 16 kbps for low quality audio such as traffic and weather. The above implies spare capacity of 585 kbps, enough for 13 more music channels.

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IBM Patent Application for Satellite Radio Receiver

2008-03-13T06:14:00.002-05:00

We came across this interesting IBM patent application this morning:

United States Patent Application	20080064325
Kind Code	A1
Bates; Cary Lee ; et al.	March 13, 2008

SATELLITE RADIO RECEIVER THAT DISPLAYS INFORMATION REGARDING ONE OR MORE CHANNELS THAT ARE NOT CURRENTLY BEING LISTENED TO

Abstract

A satellite radio receiver includes a display that displays information regarding one or more channels that are not currently being listened to. For a music channel, this information may include the name of the artist, the song title, time left in the song, etc. For a news channel, this information may include the news currently being discussed, the name of the news program, the time remaining, etc. For a sports channel, this information may include the name of the channel, a description of the sporting event, the time remaining, etc. The preferred embodiments include different ways to select which channels are "favorites" and therefore displayed on the display. One way is to keep track of which channels are most frequently listened to, and to display information regarding those channels.

Inventors:	Bates; Cary Lee; (Rochester, MN) ; Nelson; Eric John; (Rochester, MN) ; Santosuosso; John Matthew; (Rochester, MN)
Correspondence Name and Address:	MARTIN & ASSOCIATES, LLC P.O. BOX 548 CARTHAGE MO 64836-0548 US
Assignee Name and Adress:	INTERNATIONAL BUSINESS MACHINES CORPORATION New Orchard Road Armonk NY 10504
Serial No.:	941477
Series Code:	11
Filed:	November 16, 2007

U.S. Current Class:	455/3.02
U.S. Class at Publication:	455/003.02
Intern'l Class:	H04H 20/00 20080101 H04H020/00

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Sirius Proposes to Test New Equipment and Services

2008-02-24T07:44:00.003-05:00

Sirius has filed for an experimental license "to research, design and demonstrate prototype satellite radio equipment for use in its satellite digital audio radio services (“SDARS”) system and to research, design and demonstrate new services or enhancements to its existing services." Sirius would conduct experiments at its engineering labs in Vernon, NJ, and Lawrenceville, NJ.

Sirius describes the purpose as:

Sirius continuously seeks to update its technology that it uses and the services that
it offers to consumers. Thus, Sirius needs the capability to test new and prototype
equipment or service enhancements to ensure that they function correctly before
commercial production or deployment. The production of SDARS equipment and the
introduction of new services are both expensive undertakings, and Sirius needs the
capability to test its technology before expending these resources.

There aren't any clues as to what the new equipment and services might include. All we know is that it is entirely within the Sirius band.

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OT: Into the Fray

2008-02-01T16:18:00.000-05:00

We go to the ends of the world to bring you news that's important (actually, we have day jobs). Tomorrow we begin our journey into the "largest annual human migration in the world". Reports are not encouraging. It's into the fray and hope for the best. Shouldn't be too bad (famous last words); everyone is trying to get out of Shanghai, not in to it. It's the Lunar New Year in China, the biggest holiday of the year and it is when everybody goes home. Southern China is having some of the worst weather in decades, but it is also affecting other areas. Just another adventure.

If you are over that way, there is a good chance you will find us at the Big Bamboo enjoying the best cheeseburger in the world. And if any of you have favorite spots in Shanghai, let us know and we will check it out.

We will be in contact. Internet access is good, although slow at time.

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Sirius to Boost Power

2008-01-31T17:56:00.000-05:00

Today, Sirius filed an application requesting to boost the power to 2,000 Watt for the repeaters at the following locations. Currently, these repeaters operate from 150 to 800 Watt. This should improve the repeater reach considerably. Lately, the Commission has routinely granted authority for repeaters operating at or below 2,000 Watt.

Ann Arbor, MI 2 555 East William Street, Ann Arbor, MI 48104
Bridgeport, CT 2 10 Middle Street, Bridgeport CT 06604
Columbia, SC 1 1301 Gervais Street, Columbia, SC 29201
Des Moines, IA 1 666 Grand Avenue, Des Moines, IA 50309
Flint, MI 1 120 East First Street, Flint, MI 48502
Grand Rapids, MI 1 11 Monroe Avenue, Grand Rapids, MI 49503
Jackson, MS 1 210 E. Capitol Street, Jackson, MS 39201
Los Angeles, CA 1 7700 Irvine Center Drive, Irvine, CA 92618
Madison, WI 1 122 West Washington Avenue, Madison, WI 53703
Mobile, AL 1 31 N. Royal Street, Mobile, AL 36602
Naples, FL 1 3600 Prospect Avenue, Naples, FL 34104
Paramus, NJ 2 590 Industrial Avenue (aka 590 Valley Health Plaza), Paramus, NJ 07652
Raleigh-Durham, NC 1 300 West Morgan Street, Durham, NC 27701
Waterbury, CT 1 117 Pine Street, Waterbury, CT 06710
West Palm Beach, FL 2 1601 Belvedere Road, West Palm Beach, FL 33406

One could see where the WCS Coalition might take Sirius' language in the application the wrong way:

In addition, WCS licensees will have an opportunity to comment on the STA during the public notice period; as a result, Sirius has not notified the WCS licensees in the affected MSAs prior to filing this request. Therefore, Sirius respectfully requests that the Commission promptly grant its proposed modifications to its STA.

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Honda Files Application to Test Race Car Telemetry System

2008-01-17T12:26:00.000-05:00

Honda has filed an experimental application to test a data telemetry system made by McLaren Electronic Systems. Honda intends to test the system at the following locations.

• February 19-21, 2008 – Sebring, FL – LAT 27.5025 LONG -81.4505
• March 10-15, 2008 – Sebring, FL – LAT 27.5025 LONG -81.4505
• April 3-5, 2008 – St. Petersburg, FL – LAT 27.4554 LONG -82.3752
• April 17-19, 2008 – Long Beach, CA – LAT 33.7706 LONG -118.1820
• April 24-26, 2008 – Houston, TX – LAT 29.7594 LONG -95.3594
• April 29-30, 2008 – Toole, UT – LAT 40.5454 LONG -112.3002
• May 15-18, 2008 – Toole, UT – LAT 40.5454 LONG -112.3002
• June 8-10, 2008 – Lexington, OH – LAT 40.6826 LONG -82.5906
• July 9-12, 2008 – Lakeville, CT – LAT 41.9516 LONG -73.4377
• July 16-19, 2008 – Lexington, OH – LAT 40.6826 LONG -82.5906
• August 6-12, 2008 – Elkhart Lake, WI – LAT 43.8436 LONG -87.9767
• August 28-30, 2008 – Detroit, MI – LAT 42.3474 LONG -83.0604
• October 1-4, 2008 – Braselton, GA – LAT 34.1389 LONG -83.7812
• October 15-18, 2008 – Salinas, CA – LAT 36.6011 LONG -121.6729

A brief search seems to indicate that this might be for the LeMans racing series. I've camped out in the middle of the real 24 Hours of Le Mans when I lived in France, but I have no familiarity with these events. We don't know if this might be something new for Honda or old news.

The initial response from the FCC is that this application appears to be for ongoing operations and asks whether it can be licensed under other FCC rules.

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HobbyTron Receives Citation

2008-01-15T20:52:00.000-05:00

HobbyTron received an official citation from the FCC for marketing apparently illegal FM transmitters in the US and failing to provide information to a Letter of Inquiry (LOI) from October 22, 2007. The models affected include the R-FM30B-WT, R-FM100B-WT, and UX-150 transmitters (apparently made by Ramsey Electronics in the US and Canakit in Canada). Some of these transmitters have a range of over a mile. HobbyTron (Gibson Tech Ed, Inc.) had previously been issued a Notice of Apparent Liability for Forfeiture for repeated and willful violation of the the same rule.

In an apparent attempt to get around the rules, HobbyTron offers these kit for "export". In order to by the kits, the purchaser has to sign a form acknowledging that the transmitter will be used in accordance to the applicable laws and may exceed the legal limits and may not be authorized in the US. The purchaser also has to agree to hold Hobbytron harmless.

HobbyTron responded to the LOI on November 15, 2007 but did not comply with the Commission's requests. It made a half-hearted attempt at answering the FCC and basically said that if the Commission didn't like the response to let them know. In its response, they cited the form above to relieve them of any responsibility. Obviously, the FCC is not buying this.

HobbyTron faces forfeitures of $11,000 for each device or for each day in violation. It has 20 days to respond to the LOI.

These types or FM transmitter have given satellite radio a bad reputation in the past. They interfere with radio stations and reception of FM radio by listeners and are abusive.

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The FCC International Bureau Issues a Flurry of Grants

2008-01-11T18:59:00.000-05:00

The FCC International Bureau issues three minor satellite radio grants today. First, the Commission granted authority for XM to operate two low powered replacement repeaters in Pittsburgh and Philadelphia. The first was due to a building being demolished around December 12, 2007. The other was due to a building demolished in July 2005.

XM was also granted authority to operate a very low powered repeater in its new Vienna, Va. location, where, among other things, it will have a Listener Care center. The WCS Coalition initially objected to it but later withdrew its objections.

Not to be left out, Sirius was granted authority for a short, 30 day authority to operate a low powered repeater and 2 signal boosters at trade shows in the last half of March. Sirius intends to demonstrate its services at MERA 2008 in Louisville, Ky.; the New York Auto Show 2008; and MATS 2008, also in Louisville.

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AT&T Has Applications Published for Satellite Radio System

2008-01-10T20:34:00.000-05:00

Today, Thursday, January 10, 2008, AT&T had two patent applications published for a system, methods, and apparatuses to implement a satellite radio system with feedback. The applications appear to represent an entire system, not just the receiver, although the focus appears to be on a receiver capable of providing feedback to a centralize system. A user is able to request information, for example, on a song and receive and email with the requested information. Or, the user can purchase a song, etc. The applications never mention XM or Sirius. The difference from a conventional satellite radio system is the two way communication. The receiver is connected to a network via broadband, telephone line, wireless communications, etc. There is a database in the broadcast station where information can be stored and accessed. The system is for mobile or fixed applications.

One has to wonder if AT&T is interested in deploying a satellite radio system elsewhere or perhaps might be interested in acquiring an existing system or perhaps supplying the technology to a third party. The concepts are nothing new, but these applications are very curious to say the least. GM and other have applications for two way communications; however, this might be the first application for a complete system including two way communications.

Make no mistake about it. These applications are for a complete system, including the satellites.

Digital Radio Feedback Apparatuses, System, and Methods

Digital Radio Feedback Systems

Update January 11, 2008: Upon reflection, it is more obvious with AT&T is up to. AT&T is a major WCS spectrum holder. Satellite radio is an allowed use of this spectrum. Through various mergers, AT&T has acquired enough spectrum that could possibly make satellite radio practical. Plus, technology has developed that would make spot beams more practical. There are only a few players left. It wouldn't take but a few players to come together for nationwide service. Most of the WCS license holders are planning to use WiMax, but it is not practical under the current regulations. They are trying to change the rules in order to make it practical and the same time the FCC is trying to determine the final rules for satellite radio repeaters. If rules are not adapted that would make WiMax practical, then satellite radio might be the next best practical use of the spectrum. It doesn't hurt to have that out there as a bargaining chip.

It is interesting to note that this application was filed after XM and Sirius announced the merger (September 24, 2007). Applications can be kept away from the public for up to 18 months, if we recall correctly. This was less than four months ago. They wanted this to be public. However, this is not new. It is based on an application filed in September 2003 and recently became patent on September 25, 2007. No doubt it is enough to give XM and Sirius pause for consideration.

Below is a map showing the ownership of the C and D blocks of the WCS band, which are regional markets. The yellow is the WCS Wireless spectrum that XM tried to acquire and is now control by NextWave Broadband. AT&T is shown in Green. With the exception of a below regions held by Comcast, NextWave and AT&T could combine for 10 MHz of nationwide service. They each have plenty of bargaining chips for Comcast's licenses.

Then, there is another 20 Mhz available with the A and B blocks. These are much more difficult to combine since the markets are smaller and have more owners. However, spotbeams could prove to be useful to pick up major markets. Below and maps of the A and B blocks. As stated above, NextWave Broadband now controls the WCS Wireless licenses. The maps are not quite up to date but are good enough to see what is possible. The Verizon licenses has since been acquired by Horizon Wi-Com. BellSouth was of course acquired by AT&T (aka AWACS).

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AT&T and Other ISP's May Start Filtering the Net for Copyrighted Material

2008-01-09T22:40:00.000-05:00

AT&T, Microsoft, NBC and other digital filtering companies met in a panel discussion at this year's CES to discuss the network filtering of copyrighted material. The idea is that the ISP networks would "sniff" the data packets sent for copyrighted material and would prevent the downloading of infringing material. Unsurprisingly, the RIAA is one of the groups behind it. Comcast is already clamping down on traffic from BitTorrent on its network.

What does this have to do with satellite radio? It could have a lot to do with it. Many people have iPods and MP3 players. Honestly, I don't know of a single person that pays for the music that they play on them. If illegal downloading were stopped, it would kill the MP3 and iPod market. It would make satellite radio a much more attractive alternative. Although the ISP's will catch a lot of grief, it is potentially great news for satellite radio.

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SoundExchange's Motion Sledge-Hammered

2008-01-08T18:38:00.000-05:00

Today, Chief Copyright Royalty Judge, James Scott Sledge, Denied SoundExchange's motion for a rehearing '“to reconsider the definition of Gross Revenues set forth at pages 28-31 of the [Initial] Determination; and, in light of recent predictions that approval of the XM/Sirius merger is imminent, reconsider its unwillingness to assess the impact of a merger as part of its [Initial] Determination.”' Seeing that both sides aren't particularly happy with the rate determination, the Copyright Judges must have done a good job.

SoundExchange based its motion on the need "to correct a clear error or prevent manifest injustice" in regard to the definition of Gross Revenue, and on new evidence with regard to the merger. The judges rejected SoundExchange’s arguments for the same reason it rejected them in the initial determination: insufficient evidence.

SoundExchange claimed that the initial determination excluded numerous categories of revenue that would result in a significantly reduced effective royalty rate. Judge Sledge found that "SoundExchange does not provide a shred of evidence concerning the nature or magnitude of leakage suggested by its own proposed revenue exclusions and how those exclusions might compare to any exclusions found in the agreements that comprise the benchmark marketplace."

SoundExchange was also concerned that a merged entity might structure itself differently to reduce the effective royalty rate. SoundExchange failed to provide any evidence showing how or in what magnitude the rate might be effected by "gaming the system".

The judge hammered SoundExchange in his conclusion stating that, "In the absence of an adequate showing of new evidence, SoundExchange's argument amounts to nothing more than a rehash of the argument that the Judges considered in the Initial Determination."

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WCA Applies for Experimental License to Test WCS Transmissions on Satellite Radio

2008-01-04T17:55:00.000-05:00

Today, the Wireless Communication Association (WCA) filed for an experimental license "to conduct a limited experiment into the vulnerability of Satellite Digital Audio Radio Service (“SDARS”) subscriber reception devices to overload and out-of-band emissions (“OOBE”) interference caused by mobile consumer devices operating in the 2305-2320 MHz and 2345-2360 MHz Wireless Communications Service (“WCS”) band. The WCA plans to use the licenses on Horizon Wi-Com. The WCA joins Horizon Wi-Com, Comcast WCS, and Sirius in its desire to conduct tests to document the impact of the WCS transmissions on satellite radio. All of these applications are pending. Horizon WiCom and Comcast WCS are members of the WCS Coalition.

The WCA describes itself as "the founding member of the WCS Coalition", the arch nemesis of satellite radio.

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New ICO Having a COW

2007-12-26T14:58:00.000-05:00

This is a followup to the post on Orbitcast about New ICO. ICO satellite services, one of the parent companies of New ICO, was granted an experimental license to demo the potential of its ATC (Ancillary Terrestrial Component) capabilities at the January 7-11, 2008 Consumer Electronics Show. Essentially, this is the repeater system it intends to deploy with its satellite services. It should be noted that New ICO has neither a satellite in operation nor an ATC network. It intends to use "cellsite-on-wheels (COW) to simulate a terrestrial repeater site at locations around the site of the Convention Center and other CES venues." From its press release, New ICO states that it will launch its satellite in March. This is likely news to the FCC. New ICO has delayed the launch numerous times; however, it is indeed close to being able to launch. Previously, New ICO was granted another extension to launch by November 30, 2007 and to have the satellite in operation by the end of the year (December 31, 2007). That's not going to happen. On August 06, 2007, New ICO filed an application with the FCC for yet another extension to launch by January 15, 2008 and be in operation by February 15, 2008. It has already submitted a letter to the FCC as part of that application stated that launch will likely be delayed a few weeks beyond January 15, 2008. In light of this further delay, New ICO requested that the FCC extend the comment date until October 15, 2007. New ICO is already beyond the November 30, 2007 launch date as authorized by the FCC. The International Bureau has not granted any further extensions to date. The status is "Accepted for filing".

No one has opposed the current extension request; however, Inmarsat Global vehemently opposed the previous extension and filed a Petition to Deny. In its petition, Inmarsat painstakingly details the troubled history of New ICO and its repeated delays. Inmarsat will likely bring this up once again.

On November 30, 2007, New ICO filed for authority to operate its ATC. To date, the application has not even been accepted for filing, hence the experimental license to use COWs to demonstrate its ATC services. In an experimental application granted by the FCC, New ICO states that the ATC (repeater) deployment will begin no later than early 2009.

New ICO may ultimately be competition for satellite radio, but will likely be well into 2008 at the earliest and probably won't be until well into 2009. It is not a sure thing that New ICO will ever get its satellite off the ground. At some point, the Commission has got to say, "enough is enough".

ICO does have one medium earth orbit (MEO) satellite in operation. It is a leftover from its early plans to launch a constellation of these satellites. It launched two. One launched failed to put the satellite in the proper orbit. Today, one operational satellite in not in use, as we understand it; however, ICO still has plans to use it as part of an MSS system in Europe. Presently, ICO is battling the EU over the MSS band. ICO has over $4 billion invested in its effort to bring MSS into operation. They have struggled and likely will continue to struggle. TerraStar is the only MSS competitor in the US. It has been very supportive of New ICO's effort to bring its system online.

ICO to demo live Satellite Video at CES [Orbitcast]

Further Reading:

ICO Wants Its Mobile TV - via DVB-SH [Daily Wireless]

DVB-Scene

Update: After a little more research, it was discovered that New ICO had applied to extend the launch date until April 15, 2008 and the operational date until May 15, 2008. That is more consistent with its press release indicating a launch in March. The extra 15 days allows some uncertainty in the launch date. This application, filed in early November, 2007, has been accepted for filing but New ICO has not been granted authority to extend the launch milestone. New ICO is likely concerned that neither this application to extend the launch date nor the previous one file in August has been granted. However, no entity has opposed the extension.

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iBiquity (HD Radio) Would Like to Impose Conditions

2007-12-23T07:16:00.000-05:00

iBiquity Digital Corporation met with the FCC on December 19, 2007, to discuss the merger of XM and Sirius. Although iBiquity does not take a position on the merger, it is concerned that the combined entity will hinder its ability to introduce HD Radio in the marketplace. It is concerned over the exclusive arrangements that XM and Sirius have with the automobile manufacturers. It says XM and Sirius may have used subsidies and incentives with the OEMs to discourage the proliferation of HD Radio. A merged entity will have a "stronger economic position and more cash to fund subsidies and incentives".

As a remedy to the merger, iBiquity recommends that the Commission imposed the following two conditions:

1. Require that HD Radio be included in all satellite radio receivers.

2. Require tha tthe merged entity terminate all exclusive agreeements and to prohibit all such agreements with suppliers, retailers, and the OEMs.

iBiquity has generously agreed to license it patents on reasonable and nondiscriminatory terms and to make its technology available for inclusion in dual use receivers.

Satellite radio paid a small fortune to have the OEMs include satellite radio in automobiles. iBiquity appears to want a free ride. It would seem to be unfair to make this a requirement for satellite radio and would undermine satellite radio.

The satellite radio providers might welcome the second requirement.

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Sirius Requests Experimental License to Test in WCS Bands

2007-12-21T13:53:00.000-05:00

Now Sirius is requesting an experimental license to operate equipment in the WCS bands in order to research the impact of WCS transmission on satellite radio. The request is in response to the Notice of Proposed Rulemaking and the Second Further Notice of Proposed Rulemaking in the Docket pertaining the repeaters for satellite radio (95-91). Sirius is requesting expedited approval in light of the short commenting period.

Upon approval, Sirius intends to test at the six sites listed below:

1. Sirius Satellite Radio Facility, 989 Lenox Drive, Lawrenceville, NJ, 08648
o 40-17-17.0 N, 74-42-33.5 W (10 km radius)

2. Prospertown Lake, Rt. 537, Ocean County, NJ
o 40-8-6.7 N, 74-27-30.0 W

3. Manasquan Reservoir, Windeler Road, Howell, NJ
o 40-10-16.6 N, 74-12-10.2 W

4. XM Satellite Radio Facility, 3161 SW 10th St, Deerfield Beach, FL 33442
o 26-18-15.2 N, 80-8-47.6 W (5 km radius)

5. 24 Vernon Crossing Road, Vernon, NJ
o 74-29-37.2W, 41-12-46.7N

6. Highway US441, Palm Beach County, FL (10 km radius)
o 26-42-36.0 N, 80-25-12.0 W

Frequency Bands: 2305-2320 MHz: 2345-2360 MHz

Tests will be conducted in 5 MHz channels of the WCS A, B, C and D blocks

Each test channel is 5 MHz wide. Specifically the channelization is:

A: 2305-2310 MHz, 2350-2355 MHz
B: 2310-2315 MHz, 2355-2360 MHz
C: 2315-2320 MHz
D: 2345-2350 MHz

In case any of you missed it, you can find the Notice of Proposed Rulemaking and the Second Further Notice of Proposed Rulemaking here.

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OT: Microwaving Oranges

2007-12-19T19:48:00.000-05:00

We came across this interesting experimental application the other day. Raytheon and Paramount Citrus are teaming together to test Raytheon's Tempwave™ frost protection system for citrus crops. The system is intended to prevent freeze damage to crops by delivering low intensity microwave heating to make up any net heat lost during a freeze event. Paramount Citrus will provide the test crop and power for at its location in Vasaila, CA.

Raytheon intends to market its system for the 2008-2009 season. It occurred to Raytheon last month that it needed to prove the system this season before marketing it next season.

The test setup is described as follows:

The test setup will consist of 4 towers at the corners of a 30 meter x 30 meter area within the orchard. Each tower is 10 meters tall and will have 4 identical transmitter/antenna combinations at the top. (There will be a total of 16 identical antennas/transmitters.) See figure 1 attached. The antennas are arranged, and the antenna patterns designed to uniformly illuminate the orchard and supply energy lost by the crop. The system should deliver energy directly to the crop during a freeze.

Our research shows that the crop needs small but steady energy input during a frost night. An analysis predicts an RF power density of 1.8 mW/cm2 at the tree tops within the test area. Tests inside a shielded will be performed assess various parameters of the equipment/configuration in preparation of the outdoor field test.

If successful, it could be good news to the citrus farmers.

Test will be conducted between January 10, 2008 and April 30, 2008. It should be far away enough in frequency (2.45 GHz) to not interfere with satellite radio.

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Copyright Judges Publish Determination of Rates and Terms Document

2007-12-19T17:55:00.000-05:00

In their determination of rates and terms for royalty rates to be paid by satellite radio, the Copyright Judges go into detail of how their predecessor (CARP) determined the rates versus how they approached it. The document goes into the gory detailed of the various proposals and why they were not appropriate before determining that the best approach for approximately usage was revenue based, rather than a "per play" as proposed by Satellite Radio or the "per broadcast/per subscriber" as proposed by SoundExchange.

It is a very enlightening and fascinating read into the process used by the judges as well as the history behind the determination of rates. It is well worth the read. There are many nuggets of information to be garnered such as the following:

For example, EBITDA profitability for Sirius is estimated by Mr. Karmazin to be consistent with revenues generated from between 10 million and 11 million subscribers. 6/7/07 Tr. 35 (Karmazin). Increasing the current royalty rates to 13% will increase costs and raise the necessary critical mass of subscribers sufficient to generate revenues that can yield EBITDA profitability or even positive free cash flow.

We suggest that you download the following document and sit down for a nice long read:

Determination of Rates and Terms for Preexisting Satellite Digital Audio Radio Services

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Comcast Seeks Experimental License to Test WiMax

2007-12-17T17:01:00.000-05:00

Back in April, Satellite Radio TechWorld reported that Horizon Wi-Com had filed for an experimental license to test WiMax equipment operating outside of the approved operating range and near the satellite radio band. XM and Sirius expressed their concerns over this testing. This application is still pending.

Today, Comcast WCS filed a similar application to test mobile and fixed equipment in the A, B, and C blocks of the wcs spectrum in Muncie, Indiana. These blocks are are either side of the satellite radio band. This worldwide "standard production equipment" for WiMax is not approved for the wcs band by the FCC and may exceed the limits imposed on the wcs band during normal operation.

Comcast seeks to test the equipment up to 2,000 W EiRP average. The wcs band is currently limited to peak power. Readers may recall how the WCS Coalition vehemently opposed any satellite radio reader operating at over 2,000 W EiRP peak. Satellite radio won that battle at least until final rules regarding repeaters are established.

Emphasis will be on not interfering with satellite radio. Testing will seek to determine to maximum operating range that will not interfere with satellite radio.

No doubt this testing needs to be done, but not in a vacuum. It needs to be closely coordinated with the satellite radio providers. Look for XM and Sirius to express concern over this application as well.

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XM to Locate Employees in Vienna

2007-12-14T19:32:00.000-05:00

In an application filed by XM today, XM is requesting special temporary authority to operate a very low powered repeater in a building at 2650 Park Tower Drive, Vienna, Virginia. In the application, XM describes the building as a "large one". XM employees will occupy two floors and part of a third floor. "Many employees that XM intends to locate at the 2650 Building are part of XM's Listener Care team, who will be directly involved in the resolution of subscriber complaints." They, of course, will need access to a high quality signal at their desks. That is the purpose of this request.

It is an interesting application for two reasons. It sounds like they will be locating a fairly large number of employees there. Only "many", not all, are part of the Listener Care team. Some Something's up here. We need to find what else is located in this building to know the whole picture.

The second aspect of it is the XM is apparently trying to take greater control over the Li sterner Care group. Anybody that has ever contacted XM's Li sterner Cares knows that it can use some improvement, and that is an understatement. This is a welcomed change.

Update December 23, 2007: The WCS Coalition has objected to this application of a low powered repeater. It seems that the Coalition is back to its old tricks of making it as difficult as possible to carry on business for the satellite radio providers. Ostensibly, the Coalition objects to the application because XM is not clear how the repeater will work, saying that it fears XM will employ a new type of repeater that will amplify and rebroadcast the WCS signals, which could cause oscillations.

XM describes the repeater as a new, very low powered repeater. Rather than receiving its signal from a terrestrial repeater, this mini-repeater will receive its signal directly from an XM satellite. This mini-repeater would not radiate at all. It would transmit its signal via a coax cable to one or more very low powered, omni-directional repeaters (not exceeding 0.5 Watt, presumably located within the building). XM states that it will operate within its own band. The only WCS operator in the area is Horizon Wi-Com. Readers may recall that XM and Sirius objected to testing by Horizon Wi-Com of WCS equipment that operates outside of the approved operating parameters for the WCS band. Perhaps there is a connection.

The Coalition has all the technical specifications on the operation of the amplifier and is being disingenous, in our humble opinion, with its objections. The repeater clearly operates within the approved operating parameters. Perhaps the Coalition has reverted to such tactics as a bargaining chip in current rulemaking on satellite radio repeaters and the coexistence of satellite radio and the WCS licensees.

Update January 08, 2008: After XM modified its application to include more detail, the WCS Coalition conditionally withdrew its objections.

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Snapster Saga Over--Rasprodz Prevails

2007-12-14T16:57:00.000-05:00

An anonymous tipster tipped us off today that Napster, in a surprise move, withdrew its opposition to the Snapster trademark application filed by Rasprodz. The US Trademark Office has yet to accept officially accept it, but there is no reason to believe that it won't.

No reason was given by Napster. It simply said:

Napster, LLC by and through their attorneys, hereby stipulates that the above-identified opposition proceeding be dismissed. December 4, 2007

Quite possibly the two parties reached an agreement or perhaps Napster simply gave up or thought they could not win it. It appeared to us that Napster had the better argument.

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Sirius Receives Grant to Operate Repeater at Yamaha Dealer Event

2007-12-14T08:16:00.000-05:00

Sirius received a grant from the FCC to operate a low powered repeater (200W) and two signal boosters at the Yamaha Dealer Event at the upcoming Consumer Electronics Show (CES) in Las Vegas. Sirius will conduct equipment and service demonstrations at the CES between January 05-10, 2008.

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Rego, the Radio that Just Won't Die

2007-12-14T07:54:00.000-05:00

The Rego, a Sirius Satellite radio and MP3 player by US Electronics (USE), was revived for the third time recently when US Trademark Office breathed life once again into USE's trademark application. Readers my recall that USE is in a pitched battle with XM and Sirius over the merger after USE lost its court case against Sirius. It is unlikely that we will ever see the Rego as a satellite radio, unless USE receives concessions as part of the merger.

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Sirius Submits Application for 15 New Repeater

2007-12-14T07:11:00.000-05:00

Sirius applies to install yet 15 more repeaters, all of them 2,000 Watt EiRP average. Sirius shouldn't have any problems getting approval, so if you live in any of the areas below, Merry Christmas:

3420 Ellicott Center Drive,
Ellicott City, MD 21043

1603 Orrington Ave.
Evanston, IL

1710 Cleneay Avenue,
Cincinnati, OH 45212

1115 Old Dixie Hwy, West
Palm Beach, FL 33403

60-52 Madison Street,
Queens, NY 11385

24 River Rd., Bogota,
NJ 07603

201 Willowbrook Blvd,
Wayne, NJ 07470

5627 Germantown Avenue,
Philadelphia, PA 19144

811 East Cayuga Street,
Philadelphia, PA 19124

3331 Bristol Pike,
Bensalem, PA 19020

5831 Rosebud,
Sacramento, CA 95841

8780 Jackson Road,
Sacramento, CA 95826

3425 51st Avenue,
Sacramento, CA 95823

5321 1st Street NE,
Washington, DC 20011

9701 Fields Road,
Gaithersburg, MD 20878

Check out the link for topographical and aerial views of the repeater locations as well as the GPS coordinates.

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The King Makes His Mark

2007-11-21T08:04:00.000-05:00

It's official. Howard Stern is the King of All Media. He received the trademark registration Tuesday, 13 November. The news is a little dated due to very limited access in the land of pork and potatoes. It's good to be back home for the holidays, but soon I go back again.

The image to the side shows the first use of the "King of All Media".

Word Mark	KING OF ALL MEDIA
Goods and Services	IC 041. US 100 101 107. G & S: Entertainment services, namely, live performances and an on-going radio, satellite, and television broadcast program, all by a radio, satellite radio and television personality featuring humorous observations of the human condition. FIRST USE: 19940000. FIRST USE IN COMMERCE: 19940000
Standard Characters Claimed
Mark Drawing Code	(4) STANDARD CHARACTER MARK
Serial Number	78970100
Filing Date	September 8, 2006
Current Filing Basis	1A
Original Filing Basis	1A
Published for Opposition	August 28, 2007
Registration Number	3335302
Registration Date	November 13, 2007
Owner	(REGISTRANT) Stern, Howard INDIVIDUAL UNITED STATES c/o One Twelve Inc. 600 Madison Avenue New York NEW YORK 10022
Attorney of Record	Michael A. Cornman
Type of Mark	SERVICE MARK
Register	PRINCIPAL
Live/Dead Indicator	LIVE

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Royalty Rates Proposed for New Subscription Service

2007-11-09T14:58:00.000-05:00

Today, the Copyright Royal Board (CRB) published its royalty rate proposal for a new subscription service. How does this concern satellite radio, you ask? It affects it directly. These are the royalty rates for satellite radio on satellite TV. The proposed rates are given below:

§ 383.3 Royalty fees for public
performances of sound recordings and the
making of ephemeral recordings.
(a) Royalty rates. Royalty rates for the
public performance of sound recordings
by eligible digital transmissions made
over a Service pursuant to 17 U.S.C.
114, and for ephemeral recordings of
sound recordings made pursuant to 17
U.S.C. 112 to facilitate such
transmissions, are as follows. Each
Licensee will pay, with respect to
content covered by the License that is
provided via the Service of each such
Licensee:
(1) For Stand-Alone Contracts, the
greater of:
(i) 15% of Revenue, or
(ii) The following monthly minimum
payment per Subscriber to the Service of
such Licensee—
(A) From inception through 2006:
$0.0075
(B) 2007: $0.0075
(C) 2008: $0.0075
(D) 2009: $0.0125
(E) 2010: $0.0150 and
(2) For Bundled Contracts, the greater
of:
(i) 15% of Revenue allocated to reflect
the objective value of the Licensee’s
Service, or
(ii) The following monthly minimum
payment per Subscriber to the Service of
such Licensee:
(A) From inception through 2006:
$0.0220
(B) 2007: $0.0220
(C) 2008: $0.0220
(D) 2009: $0.0220
(E) 2010: $0.0250
(b) Minimum fee. Each Licensee will
pay an annual, non-refundable
minimum fee of one hundred thousand
dollars ($100,000), payable on January
31 of each calendar year in which the
Service is provided pursuant to the
section 112 and 114 statutory licenses,
but payable pursuant to the applicable
regulations for all years 2007 and
earlier. Such fee shall be recoupable and
credited against royalties due in the
calendar year in which it is paid.

§ 383.4 Terms for making payment of
royalty fees.
(a) Subject to the provisions of this
section, terms governing timing and due
dates of royalty payments, late fees,
statements of account, audit and
verification of royalty payments and
distributions, cost of audit and
verification, record retention
requirements, treatment of Licensees’
confidential information, distribution of
royalties, unclaimed funds, designation
and definition of the collection and
distribution organization, and any
definitions for applicable terms not
defined herein and not otherwise
inapplicable shall be those adopted by
the Copyright Royalty Judges for
subscription transmissions and the
reproduction of ephemeral recordings
by preexisting satellite digital audio
radio services in Docket No. 2006–1
CRB DSTRA (‘‘the SDARS Proceeding’’).
(b) Without prejudice to any
applicable notice and recordkeeping
provisions, statements of account shall
not require reports of performances.
(c) If the Copyright Royalty Judges
adopt reports of use regulations in the
SDARS Proceeding, those regulations, if
any, shall govern Licensees’ obligations
to report sound recordings used
pursuant to this part, except that
Licensees also shall report to
SoundExchange which channels are
transmitted by their respective
Providers for all past, current and future
periods. In the event that the Copyright
Royalty Judges do not adopt reports of
use regulations in the SDARS
Proceeding, then reports of use provided
by XM Satellite Radio Inc. (‘‘XM’’) and
Sirius Satellite Radio Inc. (‘‘Sirius’’) for
their use of sound recordings on their
preexisting satellite digital audio radio
services (as defined in 17 U.S.C.
114(j)(10)) shall be deemed to satisfy
XM’s and Sirius’ obligations to report
sound recordings used pursuant to this
part, and MTV Networks shall provide
census reporting, retroactive to the
inception of its Service.
Dated: November 6, 2007.
James Scott Sledge,
Chief Copyright Royalty Judge.
[FR Doc. E7–22044 Filed 11–8–07; 8:45 am]

On a separate note, those you who haven't read the Billboard interview with Chief CRB Judge James Sledge, you can read it here. It is an interesting read.

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Random Comments on the Recent FCC Document Request

2007-11-06T21:08:00.000-05:00

There have been a lot of comments by analysts over the recent document request by the FCC. Some say it means that a decision by the FCC is close at hand. Others say it means that a decision won't be rendered anytime soon. In the context of recent headlines, we don't see how any analyst could conclude that a decision is close at hand. Without the recent headlines, close might mean 3 months. However, the headlines seem to indicate that a DOJ decision could be rendered this week. So, it that context, "close" means to us this week or next. That isn't going to happen. We do believe the Commission is "close" to beginning its determination but it is a long way from being finished.

The FCC already has most of this information at its disposal. However, the FCC is a ubiquitous organization. It could be that those making the decisions don't have the information ready at their disposal; i.e., they can't find it. Plus, the same information has already been provided to the DOJ, so it is probably less of a burden just to ask the satcasters for the information. We were amazed at the brevity of the merger application in light of the application of the DirecTV/EchoStar application. The XM and Sirius have been accused of trying to exempt themselves from the conventional merger analysis. Their application seems to reflect this. Most all of this information should have been included in the original application. In our opinion, the request is just the FCC attempt to acquire all the information it needs to perform a conventional merger analysis. It is a lot of information to process. First the FCC must digest the material, analyze it against the horizontal merger guidelines, generate its determination, fact check, review, spell check, and perform the final review, or something along those lines. If the FCC has already digested the filed comments and has already started forming an opinion, we don't see a determination is less than 3 months. If not, it might be more like six months. It certainly is not a matter of weeks.

For those that favor the merger, it does bode well in the sense that FCC is not summarily rejecting it; however, it means nothing in how it might ultimately rule. It gives hope; that's about it, in our humble opinion.

One question conspicuous by its absence is anything on satellite weather. This is an area of a clear monopoly should the merger be approved. The FCC obviously is not concerned about it, so this is a positive for those favoring the merger.

The detailed request for the number of FM and AM stations in each census block and in each zip code leads one to believe that the FCC is considering terrestrial radio as competition. If so, this would be a major victory for the pro merger camp.

There are lots and lots of questions on interoperable radios. Interoperable radios were a major theme throughout the comment period. The failure of XM and Sirius to comply with the interoperable mandate could be an issue with the FCC. The toughest questions are about interoperable radios. The FCC isn't leaving any wiggle room. It is about time, in our opinion, to resolve this issue.

The technical details for the repeaters is a bit puzzling. The FCC doesn't seem to be focusing on violations that many of the merger opponents have disparaged the satcasters about. That's a positive for the merger camp, but we never thought it would get any play. It's just the technical details the Commission seeks. Maybe the FCC is attempting to determine how one system might be adapted to another. The details would seem to have little bearing on the merger. The receiver details are applicable with respect to interoperability. The step to migrate all of XM's subscribers to a common platform is a very telling request. The FCC is at least entertaining the idea of whether or not a single platform is feasible. If so, then this could imply the possible lost of the XM or Sirius frequency band.

The FCC is certainly not taking the public benefit claims at face value. It is digging into the details. XM and Sirius will have to prove their claims. This is likely the meat of the request. If it is not a public benefit, the merger will not be approved. There in no focus on minority programming. It doesn't appear that this will be an issue. The recent opportunism by Georgetown Partners would likely get much play, in our opinion.

In the final analysis, we see it neither as positive nor negative. However, it seems to indication that the final determination by the FCC is months away.

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XM Document Request

2007-11-06T21:02:00.000-05:00

Below is the text of the FCC request from XM for additional information. We thought it might be useful to have the text version available to make it easier to cut and paste. We apologize in advance for the formatting. We will work on it as we have time.

Information and Document Request for XM Satellite Radio Holdings Inc.

INFORMATION AND DOCUMENT REQUEST FOR XM SATELLITE RADIO HOLDINGS INC.

November 2, 2007

Corporate Documents and Other Agreements:

A. Provide any and all agreements and like documents relating to the Transaction, including, but not limited to, the Merger Agreement and any and all attachments, appendices, side or separate letter agreements and like documents by and between the Applicants.

B. Provide any documents relating to:

(1) agreements with major retailers, including, but not limited to, Wal-Mart, Best Buy and Circuit City, relating to the marketing and sale of XM radio receivers and related equipment (including FM wireless transmitter modulators), including commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complimentary XM service subscriptions to equipment purchasers;

(2) agreements with aftermarket equipment manufacturers or distributors, including, but not limited to, Audiovox, Delphi, Pioneer, AGT, Alpine, Sony, Polk and eton/Grundig, relating to the manufacture, distribution and/or marketing of XM radio receivers and/or related equipment (including FM wireless transmitter modulators), including commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complimentary XM service subscriptions to equipment purchasers;

(3) programming agreements relating to specialized channels, including sports and entertainment programming, including, but not limited to, Major League Baseball, MLB Home Plate, National Hockey League, the PGA Tour, Andretti Green Racing, Indy Racing League, ESPN Radio, ESPN Sports, Fox News, Fox Sports, CNN and the Food Network;

(4) agreements relating to programming with celebrity talent, including, but not limited to, Oprah Winfrey, Bob Dylan, Snoop Dog, Ludacris, Ellen DeGeneres, Tyra Banks, Bill O’ Reilly, Larry King, Opie and Anthony, and Graham Nash;

(5) agreements with car, truck, boat, recreational vehicle and motorcycle manufacturers relating to the marketing, sale and/or installation of XM equipment and service contracts, including revenue sharing, training for vehicle sales staff, service activation, subsidies, provision of complimentary XM subscriber service to vehicle purchasers and lessees, and other services;

(6) licensing agreements with, including provisions regarding subsidies to, chipset manufacturers relating to chip and other equipment component sales to consumer electronic manufacturers for use with licensed XM radio receivers; Information and Document Request for XM Satellite Radio Holdings Inc.

(7) agreements relating to joint operations with Internet Service Providers (e.g., AOL), mobile phone companies, satellite video distributors (e.g., DIRECTV), or other entities regarding the use or distribution of XM-branded programming, including music, talk or sports channels, or other non-XM branded channels (e.g., National Public Radio);

(8) agreements with car, truck, recreational vehicle and motorcycle rental companies, such as Avis, National, Alamo and Zipcar, relating to the provision of XM radios and XM service in rental vehicles, including revenue sharing, training for vehicle rental staff; commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complementary XM service to vehicle renters;

(9) agreements between XM and Sirius relating to the joint engineering operation for the research and development of interoperable radio receivers; and

(10) agreements between XM and Sirius between 1997 and the present relating to sales, programming, service or equipment.

Data, Studies and Analyses

A. Provide all company-sponsored surveys and studies cited in the Joint Opposition to Petitions to Deny and Reply Comments or otherwise submitted to the Commission by or on behalf of XM, or XM and Sirius, in this proceeding, and any underlying data and analyses.1

B. Provide the following materials, as well as any underlying data or analyses, used in the CRA Economic Analysis of the Competitive Effects of the Sirius-XM Merger:

(1) the number of FM and AM stations reaching each census block in the lower- 48 United States states (“lower-48 states”);

(2) the average number of FM and AM stations reaching each Zip Code Tabulation Area (“ZCTA”) in the lower-48 states;

(3) the number of XM subscribers in each ZCTA in the lower-48 states; and

(4) the cited demographic information for each ZCTA in the lower-48 states.

C. Provide any underlying data and analyses used in the Furchtgott-Roth Economic Enterprises’ study of the Sirius-XM Merger that are not already in the public record.

D. Provide all studies, analyses, evaluations, and strategic discussion materials prepared by or for XM, or XM and Sirius, after January 1, 2005, that are intended to offer guidance on the economic advisability of the proposed merger.

E. Provide all studies, analyses, and evaluations prepared by or for XM of subscriber churn from the automobile and retail sales sectors, respectively, for the period January 2001, to the present.

1 See XM Satellite Radio Holdings Inc., Transferor, and Sirius Satellite Radio, Inc., Transferee, Joint Opposition to Petitions to Deny and Reply Comments of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., MB Docket No. 07-57, filed July 24, 2007. Information and Document Request for XM Satellite Radio Holdings Inc.

F. Provide all surveys, analyses, and evaluations of listener behavior prepared by or on behalf of XM, including, but not limited to, audience studies (i.e., ratings data, usage, audience demographics, and geographic distribution of audience) for the period January 2001, to the present.

G. Provide all studies, analyses, and evaluations prepared by or on behalf of XM, or XM and Sirius, performed after January 1, 2005, regarding price projections for proposed new programming options and a la carte packages, including information relating to price stability, channels per programming package, and pricing comparisons between the current basic $12.95 package and new programming options on a per-channel basis.

H. Provide the following information on all promotions conducted by XM involving pricing, rebates, coupons, and all other forms of discounts offered to new or existing subscribers (including, but not limited to, discounts on equipment, service activation fees, installation charges, and service fees, such as free or discounted service trial periods), for the period January 1, 2005, to the present:

the name of the promotion;

the beginning date of the promotion;

the ending date of the promotion;

(4) the nature of the promotion (coupons, rebates, promotional pricing, etc.);

the effect of the promotion on prices (e.g., reduced monthly price by $5 per month for three months, two free months of service, $50 rebate on a radio, no activation fee, etc.);

(6) the eligibility and other requirements (e.g., new customers only, minimum subscription periods, purchases from specific retailers or original equipment manufacturers (“OEMs”), or of specific equipment, geographical limitations, etc.); and

(7) the number of subscribers that took advantage of the promotion.

I. For each such promotion described in the response to Question H above, provide copies of all documents supporting the response or otherwise relating to the promotion. Technical Information

A. Provide a list of the XM terrestrial repeaters deployed in each market since January 2001, and, for each such terrestrial repeater, provide the following information:

(1) latitude, longitude, and community;

(2) antenna type;

(3) antenna orientation;

(4) antenna downtilt;

(5) antenna height;

(6) Equivalent Isotropically Radiated Power (“EIRP”);

(7) dates that operation of the facility with those parameters commenced and ended;

(8) description of any technical modification to the facility; and

(9) dates that operation of the modified facility commenced and ended. Information and Document Request for XM Satellite Radio Holdings Inc.

B. Provide the methods or technologies of coding, compression, encryption, modulation, signal bandwidth and bit rate for both satellite and terrestrial repeater networks used since January 2001.

C. List all receiver models sold since January 2001 and include all chipsets data including the manufacturer of the chipset used in them. Provide any statistics showing whether these receivers could become interoperable with minor changes in the chipset design or in the software program of these receiver chips.

D. Provide the data sheet of technical characteristics for each chipset used in all receiver models sold since January 2001.

. Provide a description of all efforts to develop and commercialize interoperable satellite radio receivers and any difficulties in such development and commercialization. F. Describe all steps necessary to migrate all of XM’s subscribers to a common technology platform and the cost the company and its customers will incur to implement such a migration.

G. Provide maps, in .gxt format where possible, of the actual or expected geographic coverage area(s) for each of the XM satellites already in orbit or under development, including associated power flux density contours. Describe what factors went into the selection of the geographic coverage areas for the XM satellite networks, as well as any technical, economic, or other considerations that limit the ability of the XM satellite network to serve U.S. states and territories outside the contiguous United States.

IV. Claimed Public Interest Benefits

A. Provide a detailed description of each of the cost savings expected to be realized as a result of the proposed transaction. For each of these anticipated cost savings:

(1) provide a full explanation as to why those cost savings would not be achieved absent the proposed transaction;

(2) provide a quantification of the cost savings and an explanation of how the quantification was calculated, including all assumptions and their sources;

(3) state separately the one-time fixed cost savings, recurring fixed cost savings, and variable cost savings (in dollars per unit and dollars per year); and

(4) provide sufficient supporting evidence to demonstrate that these cost savings will result in cognizable public interest benefits under our merger review standard.

B. Describe any other efficiencies that are expected to occur as a result of the proposed transaction. For each of these other anticipated efficiencies:

(1) provide a full explanation as to why those efficiencies would not be achieved absent the proposed transaction; Information and Document Request for XM Satellite Radio Holdings Inc. Page 5 of 12

(2) provide a quantification of the efficiencies and an explanation of how the quantification was calculated, including all assumptions and their sources; and

(3) provide sufficient supporting evidence to demonstrate that these efficiencies will result in cognizable public interest benefits under our merger review standard.

C. With respect to the synergies Applicants expect will materialize and result in more programming choices at lower prices, including claimed benefits from a la carte programming and programming efficiencies: (see Consolidated Application at 9-11, 13, 172; Joint Opposition at 10-14, 19-21):

(1) list each audio and video channel distributed in the United States currently by XM and for each such channel state: (a) whether the content is exclusive to XM; and (b) whether the content is also available on Sirius or over other media, including but not limited to terrestrial broadcast radio, cable television, Internet stream or download/podcast, or HD radio;

(2) for each channel identified in question (1)(a), indicate whether the company has obtained the rights necessary, if any, to distribute the programming by the combined company on an a la carte basis or as part of the “best of” or other proposed programming packages.

(3) with respect to the claim that the “combined company will be able to consolidate redundant programming,” provide a list of channels which are duplicative on XM and Sirius and expected to be consolidated.

(4) explain why the proposed billing credit for subscribers who do not elect adult programming is a merger-specific benefit. In addition, address whether the Company would offer such a credit in the absence of merger approval.

(5) explain what short-term and long-term plans currently exist to “provide increased opportunities for a wider variety of content providers,” to distribute niche programming to a wider audience via the merged entity. Explain why this benefit will only be achieved through the Transaction.

(6) with respect to radio receivers and other equipment needed to access the proposed, new program packages: (a) provide all documents regarding the claim that “subscribers will be able to continue to use their existing radios.” Explain in detail what equipment, including any enhancements or additional devices, will be needed by subscribers to access these packages. Identify Applicants’ plans regarding target dates and the projected costs to subscribers for any enhancements or additional devices;

2 See XM Satellite Radio Holdings Inc., Transferor, and Sirius Satellite Radio Inc., Transferee, Consolidated Application for Authority to Transfer Control, filed Mar. 20, 2007. Information and Document Request for XM Satellite Radio Holdings Inc. Page 6 of 12 (b) if certain equipment or enhancements will be needed to access certain of these programming packages, but not others, specify the exact equipment and/or enhancements (e.g., chipsets, compression techniques) that will be required to make each of these programming packages available; and

(c) provide all documents regarding the claim that “subscribers will eventually purchase new radios capable of receiving all of the content of both services.” Explain whether all Sirius and XM subscribers – not just subscribers that select a la carte programming – will be required to purchase new radios capable of receiving all of the content of both services.

(7) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies.

D. With respect to Applicants’ claim that the merger will “foster the commercial introduction of interoperable satellite radios” thereby providing greater customer choice and convenience (see Consolidated Application at 15-16):

(1) explain whether Applicants will make commercially available the “radio that is interoperable with each other’s networks” as developed by the jointly funded engineering team and described in the Consolidated Application. If so, explain when this interoperable radio prototype will be commercially available.

(2) if not, explain whether Applicants will make commercially available a different radio prototype capable of receiving Applicants’ combined signals, and when it will be available for commercial distribution.

(3) provide all documents that detail the intermediate steps, internally and with regard to equipment manufacturers, that will occur prior to the commercial availability of radios capable of receiving all of the content of both services.

(4) identify Applicants’ plans and target dates for the commercial distribution of interoperable radios at retail distribution centers and via automobile manufacturers. As part of this response, explain Applicants’ plans for making new receiver equipment or enhancements available to consumers who have existing automobile SDARS receivers.

(5) identify electronics manufacturers who have committed to, or have expressed an interest in, producing Applicants’ interoperable radio;

(6) identify anticipated prices for such equipment;

(7) identify and describe Applicants’ plans to subsidize interoperable radios;

(8) identify OEMs that have committed to installing interoperable radios. (9) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies; and

(10) explain why these claimed benefits will be achieved only through the Transaction.

E. With respect to Applicants’ claim that the merger will accelerate deployment of advanced technology (see Consolidated Application at 14):

(1) identify the “wider range of low cost, easy-to-use, multi-functional devices” that will result from the merger; Information and Document Request for XM Satellite Radio Holdings Inc. Page 7 of 12

(2) identify the planned new services, such as advanced data and telematics services, including enhanced traffic, weather and infotainment offerings that will result from the merger;

(3) identify any plans to make available to XM subscribers a service similar to SIRIUS Backseat TV, and when this service will be available to XM subscribers (see Joint Opposition at 22);

(4) explain how the merger will enhance the delivery of emergency services programming and information (see Joint Opposition at 24);

(5) with regard to XM’s services to business/commercial customers: (a) identify services offered by XM and the subscription fees; and (b) identify which services will be available post-merger, their subscription fees, and any distinctions between services currently available; and 6. explain why these claimed benefits will be achieved only through the Transaction;

(7) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies and claims.

F. With respect to Applicants’ claim that the merger will safeguard the future of satellite radio and produce a stronger, more stable competitor in the audio entertainment market (see Consolidated Application at 17-20):

(1) identify whether the merged entity will eliminate any of the satellites currently deployed by Applicants, respectively;

(2) identify whether the merged entity will eliminate any of the repeater networks currently deployed by Applicants, respectively;

(3) identify whether Applicants, absent the merger, will have access to capital markets to sustain continued research, development and technological innovation; and

(4) provide any and all documents that discuss, identify, or otherwise relate to forecasts projecting ahead for periods beyond three years regarding the financial performance of the firm, including but not limited to subscribers, revenues, costs, profits, cash flow, and overall viability of the firm.

G. Describe any other public interest benefits that are expected to occur as a result of the proposed transaction, and provide a full explanation as to why those benefits would not be achieved absent the proposed transaction. Provide documents that serve to provide sufficient support for these benefit claims so that the Commission can verify the likelihood and magnitude of each claimed benefit. Information and Document Request for XM Satellite Radio Holdings Inc.

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Georgetown Partners Latest to Lay Claim to Bandwidth

2007-11-05T18:49:00.000-05:00

Radio Online featured an article last Friday about the opposition of the merger by Georgetown Partners (GP), unless the deal is re-structured. It is based on a filing by GP to the FCC on October 18, 2007. GP describes itself as "a minority-owned closely-held limited liability corporation that invests in and manages various properties, including those related to communications."

The group is adamantly opposed to the merger, describing it as, "Simply put, the Sirius and XM transaction as presently structured is detrimental to the public on every meaningful front."

Obviously, it is not too opposed to it. As a remedy, GP advocates the sub-leasing of part of the channel capacity to a minority-controlled entity. In an exparte filing today, GP was more specific. It wants at least 20% of the channel capacity set aside for minority programming to ensure competition and diversity in the satellite radio marketplace. Conveniently, GP would be the one to answer the call.

Unlike Primosphere, GP is not legally entitled to be a satcaster. As a consequence, there could be legal issues with this proposal.

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Breaking News: Royalty Rates Set at 7.25% of Gross Revenues for Preexisting Subscription Services

2007-11-03T22:03:00.000-05:00

The Copyright Royalty judges have made their proposal for the royalty rates for preexisting subscriptions services. There are two parts to the recent trial. One is for the royalty rates for pre-existing subscription services (such as Music Choice) and the other is for satellite radio. Music Choice and SoundExchange reached an agreement shortly before the trial ended. If we are interpreting this correctly, this only applies to the agreement reached between Music Choice and SoundExchange and not to satellite radio. However, one might argue that the rates will be similar for satellite radio. It is likely, at least, an upper limit or close to it.

The proposed rate is set at 7.25% of gross revenues. The proposal is now open for public comment until November 30, 2007. If you choose to comment, you must be prepared to participate in future proceedings.

Here is the summary:

37 CFR Part 382 [Docket No. 2006–1 CRB DSTRA] Adjustment of Rates and Terms for Preexisting Subscription and Satellite Digital Audio Radio Services AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Notice of proposed rulemaking. SUMMARY: The Copyright Royalty Judges are publishing for comment proposed regulations that set the rates and terms for the use of sound recordings by preexisting subscription services for the period January 1, 2008, through December 31, 2012.

DATES: Comments and objections, if any, are due no later than November 30, 2007.

Below are the relevant details:

§ 382.2 Royalty fees for the digital performance of sound recordings and the making of ephemeral phonorecords by preexisting subscription services.

(a) Commencing January 1, 2008, and continuing through December 31, 2011, a Licensee’s monthly royalty fee for the public performance of sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any number of ephemeral phonorecords to facilitate such performances pursuant to 17 U.S.C. 112(e) shall be 7.25% of such Licensee’s monthly gross revenues resulting from residential services in the United States.

(b) Commencing January 1, 2012, and continuing through December 31, 2012, a Licensee’s monthly royalty fee for the public performance of sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any number of ephemeral phonorecords to facilitate such performances pursuant to 17 U.S.C. 112(e) shall be 7.5% of such Licensee’s monthly gross revenues resulting from residential services in the United States.

(c) Each Licensee making digital performances of sound recordings pursuant to 17 U.S.C. 114(d)(2) and ephemeral phonorecords pursuant to 17 U.S.C. 112(e) shall make an advance payment of $100,000 per year, payable no later than January 20th of each year. The annual advance payment shall be nonrefundable, but the royalties due and payable for a given year or any month therein under paragraphs (a) and (b) of this section shall be recoupable against the annual advance payment for such year; Provided, however, that any unused annual advance payment for a given year shall not carry over into a subsequent year.

(d) A Licensee shall pay a late fee of 1.5% per month, or the highest lawful rate, whichever is lower, for any payment received after the due date. Late fees shall accrue from the due date until payment is received.

(e)(1) For purposes of this section, gross revenues shall mean all monies derived from the operation of the programming service of the Licensee and shall be comprised of the following:

(i) Monies received by Licensee from Licensee’s carriers and directly from residential U.S. subscribers for Licensee’s programming service;

(ii) Licensee’s advertising revenues (as billed), or other monies received from sponsors, if any, less advertising agency commissions not to exceed 15% of those fees incurred to a recognized advertising agency not owned or controlled by Licensee;

(iii) Monies received for the provision of time on the programming service to any third party;

(iv) Monies received from the sale of time to providers of paid programming such as infomercials;

(v) Where merchandise, service, or anything of value is received by Licensee in lieu of cash consideration for the use of Licensee’s programming service, the fair market value thereof or Licensee’s prevailing published rate, whichever is less;

(vi) Monies or other consideration received by Licensee from Licensee’s carriers, but not including monies received by Licensee’s carriers from others and not accounted for by Licensee’s carriers to Licensee, for the provision of hardware by anyone and used in connection with the programming service;

(vii) Monies or other consideration received for any references to or inclusion of any product or service on the programming service; and (viii) Bad debts recovered regarding paragraphs (e)(1)(i) through (vii) of this section.

(2) Gross revenues shall include such payments as set forth in paragraphs (e)(1)(i) through (viii) of this section to which Licensee is entitled but which are paid to a parent, subsidiary, division, or affiliate of Licensee, in lieu of payment to Licensee but not including payments to Licensee’s carriers for the programming service. Licensee shall be allowed a deduction from ‘‘gross revenues’’ as defined in paragraph (e)(1) of this section for affiliate revenue returned during the reporting period and for bad debts actually written off during reporting period.

(f) During any given payment period, the value of each performance of each digital sound recording shall be the same.

Update
It was called to my attention the the 7.25% rate set for the preexisting subscriptions services is the exact same rate as set by the library of congress in 1998. Perhaps this bodes well for the royalty rates for satellite radio remaining the same.

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Copyright Royalty Board Decision by December 17

2007-10-30T17:03:00.000-05:00

Mel Karmazin, CEO Sirius, said today:

You've heard a little bit about the royalty proceeding and that royalty proceeding covers the period from January 1, 2007 to the end of 2012. The trial associated with that came to a close about two weeks ago and we expect the copyright royalty board judges to reach a decision in mid-December.

As we have been following the development of the Copyright Royalty Board, we can corroborate this statement. Late this morning, we received the following statement in an email from the Copyright Royalty Board:

The Judges will be issuing their determination by no later than December 17, 2007.

So, before Christmas, XM and Sirius will either have their Christmas presents or their lumps or coal.

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XM and Sirius Oppose NAB's Bid to Stop Clock

2007-10-25T17:50:00.000-05:00

In the FCC comments on the merger today, XM and Sirius opposed the NAB's and US Electronics' petition to stop the merger clock (see Orbitcast article NAB wants FCC to stop the clock).

The NAB's motivation is pretty clear; they will do anything to stop the merger. One has to admire the NAB's undying commitment to its members. They are just earning their keep. U.S. Electronic' (USE) motivation is less clear. It has been carrying the ball lately in the effort to derail the merger. USE lost its lawsuit against Sirius. One has to wonder if this is its motivation for playing the spoiler.

Sirius' and XM's arguments are persuasive. One of the NAB's argument to stop the clock is that it has filed for information concerning the FM modulator fiasco under the Freedom of Information Act. The NAB has been unable to obtain the information. XM and Sirius argue that the names of the manufactures and distributors, the names and titles of employees, the recollection of present and past employees, and the responses to the Commission's Letter of Inquiry are irrelevant. We agree. So does the Enforcement Bureau. They make one very good point in a very amusing (perhaps biting is a better word) way:

Instead, NAB claims without a hint of irony that without the unreleased records, which are already in the Commission's possession, the Commission "cannot make an informed decision regarding whether the Applicants can be relied on to keep their promises and comple with any conditions."

They seem to almost belittle USE for its "me too" petition, calling their arguments "a hodgepodge of unconnected and irrelevant assertions that should also be decisively rejected by the Commission." We take exception to one of XM's and Sirius' arguments. The interoperable receivers are relevant to the merger. One of their arguments for not having them today is that no manufacturer wants to manufacture them. The same will hold true for the receivers required to receive both XM and Sirius promised as part of the merger. They could use the same argument post merger to renege on this promise. But, in general, we agree with the satellite radio providers. USE's arguments are like a loose canon, aimlessly wandering about, wreaking havoc everywhere it touches. Even a blind hog finds an acorn now and then.

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XM to Test Health of XM1 and XM2 Satellites

2007-10-22T17:11:00.000-05:00

XM recently requested three Special Temporary Authorities (STA's) for 30 days "to assess the performance of the XM system and the state of health of the XM−1 and XM−2 payloads." The testing will be be conducted in the center of XM's spectrum, normally reserved for the repeater network. The transponders will be operated at saturation while the EiRP measurements are made. No doubt that this is an effort to improve the redundancy of the system to avoid the fiasco that resulted in the temporary lost of one satellite and the repeater system.

XM1 and XM2 serve as in-orbit spares for XM3 and XM4.

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Chose to Know... Or Not to Know

2007-10-21T06:47:00.000-05:00

The saga of the Ikno opposition to Pioneer's Inno trademark application continues. There is nothing like waiting until the eleventh hour and screwing it up. The closing date for discovery in the trademark trial was September 23, 2007. Ikno's attorney filed a motion for a 45 day extension for discovery on September 25, 2007 (dated the 23rd). The stated purpose of the extension was to allow time for the two parties to reach a resolution. What Ikno's attorney didn't know was that he was required to serve this motion on the opposing party. Opps! Consequently, the Trademark Office rejected the motion on October 10, 2007.

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Charlie Daniels Band Lends Support to Merger

2007-10-04T12:14:00.000-05:00

Charlie Daniels isn't fiddling around. He recently sent his comments to the FCC in support of the merger. He hosts his show, Road Dog Trucking, on Sirius channel 147. His support is for the truckers that spend much of their lives on the road and who have played no small part in the success of satellite radio. He feels that there will be a wider range of programming options for truckers and that the merged company will be able to devote more resources to trucking issues such as traffic and weather.

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Satellite Radio Reaches Agreement on Royalty Rates for Satellite TV

2007-10-02T18:05:00.000-05:00

This might be old news for some, but it is the first that we have heard. Sirius, XM, and MTV were before the Copyright board to determine fair royalty rates for digital audio channels on satellite TV. According to the site, the proceeding are over due to the three reaching agreements with SoundExchange. Here's a reprint from the site:

Digital Performance Right in Sound Recordings and Ephemeral Recordings for a New Subscription Service

(Docket 2005-5 CRB DTNSRA)

Hearing Information

The rebuttal phase of the trial to determine the reasonable rates and terms for a new type of subscription service that performs sound recordings on digital audio channels programmed by the licensee for transmission by a satellite television distribution service to its residential customers where the audio channels are bundled with television channels as part of a “basic” package of service and not for a separate fee was scheduled to take place from September 10, 2007 through September 12, 2007.

However, the Services (Sirius Satellite Radio, Inc., XM Satellite Radio, Inc., and MTV Networks) and SoundExchange reached an agreement and therefore no further proceedings are necessary.

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Cousin Brucie Lends Support to Merger

2007-10-02T17:32:00.000-05:00

Today, Bruce Morrow (aka Cousin Brucie) filed his comments with the FCC in support of the merger. He makes the point that terrestrial stations are pulling the plug on oldies hits. His stream on Sirius gives him "the opportunity to play classic favorites that have all but forgotten by other stations." "The merger of XM and Sirius will ensure that satellite radio remains a strong alternative to ubiquitous Top 40 stations..." He also comments that the a la carte pricing will be a benefit to subscribers.

It is good to see him weigh in on the merger.

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XM Receives Extension on Statement of Use

2007-09-29T07:37:00.000-05:00

Remember the trademark applications for Remora and XM Pix? Both of these applications created massive speculation. No products have been introduced yet; however, XM has received a Notice of Allowance for both trademarks. It is up to XM to submit a Statement of Use before the trademark applications are granted. XM recently received extensions for the Statement of Use for both. It is the second such extension for Remora. What does this mean? It means they haven't given up on whatever inspired the applications for Remora and XM Pix. Maybe we will see something yet.

Interestingly, XM also filed for an extension of time to file a Statement of Use this past Thursday for "XM Radio". Our guess is that XM is so preoccupied with the merger that this one fell through the cracks.

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International Bureau Moving Expeditiously on Satellite Radio Applications

2007-09-28T18:53:00.000-05:00

Recently, the International Bureau of the FCC has been moving expeditiously on satellite radio applications by XM and Sirius, granting authority on six applications, no less, in the last 2 weeks. In addition, two other XM applications were disposed of when made moot by the authority to operate repeaters in Miami and Nevada (XM withdrew these applications). No applications were denied during this period.

Since the FCC establish average power as the method of measurement (at least until the final repeater rules are established), the WCS Coalition has not had any grounds to protest repeaters operating at or below 2,000 Watt EiRP. The more controversial applications are still pending.

After the FM modulator fiasco, the FCC moved slowly on all applications. The FCC is now moving at a more reasonable pace, except for the more important and controversial applications. Is it because of the current visibility of satellite radio due to the merger? or perhaps the satellite radio providers are back into the good graces of the FCC? or are XM's and Sirius' arch nemeses too preoccupied with the merger to put up much of a fight? or maybe that the FCC is just tired of NAB's and the WCS Coalition's continual whining? Perhaps it is all of the above.

Applications granted in the last two weeks:

XM:

SAT-STA-20070608-00079 Authority to drift XM-2 to the 85.2WL orbital location
SAT-STA-20070628-00091 Authority to operate a substitute low power terrestrial repeater (less than 2 kW EIRP) for one hundred (180) days in Miami
SAT-STA-20070628-00093 Authority to operate a modified substitute low power terrestrial repeater (less than 2 kW EIRP) for one hundred eighty (180) days in Las Vegas, Nevada
SES-STA-20070612-00795 Authority to conduct TT&C operations in conjunction with the relocation of XM-2

Sirius:

SAT-STA-20070719-00104 Authority to operate five (5) low-power satellite digital audio radio service terrestrial repeaters
SAT-STA-20070907-00121 Authority for 30 days to operate terrestrial repeaters and signal boosters at trade shows between October 8, 2007 and November 2, 2007

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Sirius Submits Application for 15 New Repeaters

2007-09-28T17:39:00.000-05:00

Today, Sirius applied for authority to install 15 new repeaters operating at 2,000 Watt EiRP average. Repeaters are planned for the following locations:

1770 Lower Rosewell Rd, Marietta, GA
701 Lee Street, Des Plaines, IL
1705 Peters Road, Irving, TX 75061
903 S. Mayhill Road, Denton, TX
8509 East Northbelt Drive, Humble, TX
1360 Ocean Parkway, Brooklyn, NY
830 East 163rd Street, Bronx, NY
4077 Park Avenue, Bronx, NY
60 Turner Place, Brooklyn, NY
1261 Des Peres Rd., Des Peres, MO
9144 Pershall Rd., Hazelwood, MO
4070 Boot Bay Rd., Plant City, FL
18323 Flagship Dr., Lutz, FL
5233 Willana Court, Tampa, FL
4438 Goldernod Rd, Winter Park, FL

Update: Application granted on December 10, 2007

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XM Granted Patent for Method and Apparatus for Determining Location in a Satellite Communication System

2007-09-26T20:10:00.000-05:00

Yesterday, September 25, 2007, XM was granted a patent for a Method and Apparatus for Determining Location in a Satellite Communication System. The application was one that initially struck fear in the heart of the NAB. The NAB feared that the technology could be used to implement local advertising in satellite radio receivers. This patent describes the method of using two satellites and terrestrial repeaters for determine approximate location within the coverage area. The patent has many applications and is consistent with some XM's other applications for regional information provided to dealerships. The grant of the patent should ruffle a few feathers once again.

This patent is among a string of patents that have been granted to XM recently. This was the fourth patent granted over the last 3 months. Others include:

METHOD AND APPARATUS FOR CONTINUOUS CROSS-CHANNEL INTERLEAVING

METHOD AND APPARATUS FOR NAVIGATING, PREVIEWING AND SELECTING BROADBAND CHANNELS VIA A RECEIVING USER INTERFACE

METHOD AND APPARATUS FOR TIMING RECOVERY IN AN OFDM SYSTEM

Sirius was also granted an interesting patent at the end of July:

SYSTEM AND METHOD FOR CREATING AND RECEIVING PERSONALIZED BROADCASTS

One has to wonder whether a service such as Slacker would run afoul of this patent.

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Sirius Receives Authority for 5 New Repeaters

2007-09-24T18:07:00.000-05:00

Today, Sirius received grant of authority to operate five new repeaters:

Cincinnati (84-23-19.0, 39-13-10.0)
St. Louis (90-31-53.4, 38-45-10.2)
(2) Houston (95-31-02.70, 30-00-35.60), (95-25-35.4, 30-07-18.6)
Miami (80-26-25.9, 25-33-44.5)

The FCC has been reacting reasonably with the repeater requests since accepting average power as the measure as opposed to peak power. Sirius applied back in July. All of the above repeaters are rated at 2,000 Watt EiRP average.

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OT: Sea Launch Readies for DTV 11

2007-09-22T18:33:00.000-05:00

Last Tuesday, September 18, 2007, Boeing Frequency Management Services filed for an experimental license on behalf of Sea Launch to test the next DirecTV satellite, DTV 11, at the payload processing center and in port prior to moving the launch vehicle to the equatorial launch site. This should be the first launch since the catastrophic launch failure on January 30, 2007.

Testing is scheduled between November 01, 2007 and May 01, 2007. Launch will take place shortly after testing.

Sea Launch provided the launch services for the XM satellites.

Earlier this year, Sea Launch discovered that it had failed to properly transfer licenses in 2004 when it re-incorporated. Since that time, Sea Launch employed the services of Boeing's Frequency Management Services to manage the regulatory functions.

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XM/Sirius Reject WCS Coalition's Proposal

2007-09-22T17:50:00.000-05:00

In a joint filing this past Wednesday, September 19, 2007, Sirius and XM rejected the WCS Coalition proposal to coexist in the 2.3 GHz band. On October 18, 2006, Sirius petitioned the FCC to established the final rules for repeaters. XM followed in January 2007 with its support of the petition. XM took the opportunity to remind the Commission of why the stringent rules were applied to the WCS band.

In its proposal, the Coalition offered a number of compromises. In their joint filling, XM and Sirius successfully refute the arguments put forth by the coalition. However, there were areas of agreement as quoted below:

• blanket licensing of satellite radio repeaters;

• exemption of very low power repeater transmitters from licensing restrictions;

• relying on 16 dB band pass filters in WCS transceivers to reduce potential interference from satellite radio repeaters;

• assessing interference levels via average power measurement;

• establishing inter-licensee coordination to share details about proposed new deployments; and

• commencement of a rulemaking proceeding that will formulate simultaneous changes to both Part 27 and Part 25 rules.

The main areas of concern to XM and Sirius are:

* The mobile services would "cause crippling interference to Satellite Radio"

* Limiting transmit power rather than power flux density would cause undue interference to satellite radio

* Refusal of the Coalition to accept the grandfathering of existing repeaters.

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Sirius Receives Certification on 3 New Radios

2007-09-18T20:32:00.000-05:00

Sirius' 3 manufacturers each recently received certification on a new radio, including the new Stiletto 2 and cradle by Wistron Neweb; the Sportster 5 by Ki Ryung; and the Stratus 4 by Humax.

The Stiletto 2 comes with a 1615 mAH, 3.7V, Li ion polymer battery. The battery life is given as follows:

In addition to the 2 GB internal memory, the Stilletto 2 can accommodate up to an 8 GB microSD card. It is located under the battery, so the battery has to be removed in order to install it. The microSD cannot be used to store Sirius content.

Up to 10 hours of individual songs can be recorded. It will hold up to 100 hours of scheduled or block recordings. Up to 800 MB of purchased or subscribed MP3 or WMA content can be downloaded to the unit. Radio replays are up to the available memory. The unit integrates with the Yahoo! Musicbox software to manage playlists and download music.

It accommodates the 802.11b/g WiFi standard.

Sounds like another winner for Sirius.

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WCS Coalition Opposes Sirius' Experimental License

2007-08-23T14:48:00.000-05:00

Not surprisely, the WCS Coalition opposes Sirius' experimental license application to test its farm of experimental repeaters in Las Vegas, even though the repeaters are all low powered. Sirius intends to test up to 10 repeaters operating at or under 2,000 Watt EiRP. It seems that the Coalition is back to its old tricks.

The full text of the experimental application is here. It is still pending.

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FTC Appeals Whole Foods/Wild Oats Merger Decision

2007-08-19T09:07:00.000-05:00

Most of you have probably read on Orbitcast or Sirius Buzz where a federal judge has ruled that the merger of Whole Foods and Wild Oats can go forward. Many believe that this decision bodes well for the merger between XM and Sirius.

We have been advised by a prominent DC lawyer to stick to building decks in the backyard rather than trying to interpret the law, so in keeping with that, we submit here what appears to be an appeal by the FTC to over turn the decision made in favor of the merger. The appeal is dated August 17. We will leave it to the lawyers to interpret the actual meaning:

Notice is hereby given that plaintiff the Federal Trade Commission appeals to the United States Court of Appeals for District of Columbia Circuit from an order of the United States District Court for the District of Columbia, entered August 16, 2007, denying plaintiff’s motion for a preliminary injunction in the captioned proceeding.

The original order seems to be no more that a chink in the armor of the FTC. We are unfamiliar with the arguments of the Whole Foods/Wild Oats merger, but it would seem to be quite a bit different from the merger of Sirius and XM. The most notable difference would be the barrier to entry. Although Whole Foods and Wild Oats may be large chains, there are most other choices for organic and specialty grocery products. The local Bi-Lo carries some organic foods. One can also purchase organic salad material from Sam's. Although these might not be direct competition, if the combined entity were to raise prices, places like Sam's and Bi-Lo might expand their selections. Then there is smaller competition like Garner's and the Fresh Market. They could simply expand there operations. Let's face it, all one needs is a good location, a market, and a good stock of the right products to get into the business. We like Whole Foods, despite the organic grocer just up the street that went out of business about the time Whole Foods came in. Whole Foods is a better place with more selection and lower prices. Whole Foods was a good substitute and it is only a minor inconvenience to travel a few extra miles. And Garner's is a reasonable substitute for Whole Foods. As long as we can get our Yerba Mate, we are okay.

Most of what the FTC does seems to be cloaked in secrecy. The process is not nearly as open as with the FCC. Perhaps some day the process will see the light of day. However, there is one exhibit that seems to outline the FTC's case. It is dated August 15, 2007 and is entitled Plaintiff’s Public Proposed Conclusions of Law". It is well worth the read for anyone that wants to understand the merger process. Here is the text of the document such as it is. We apologize in advance for the bad formating and conversion. We just don't have the time to fix it:

Exhibit 1–Plaintiff’s Public Proposed Conclusions of Law

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Dated: August 15, 2007

JEFFREY SCHMIDT MICHAEL J. BLOOM
Director RICHARD B. DAGEN (D.C. Bar No. 388115)

THOMAS J. LANG (D.C. Bar No. 452398)
KENNETH L. GLAZER
CATHARINE M. MOSCATELLI (D.C. Bar No. 418510)
Deputy Director MICHAEL A. FRANCHAK

Bureau of Competition Federal Trade Commission
Federal Trade Commission 601 New Jersey Ave., N.W.
600 Pennsylvania Ave, N.W. Washington, DC 20001
Washington, DC 20580 (202) 326-2475 (direct dial)

(202) 326-2284 (facsimile)
WILLIAM BLUMENTHAL mjbloom@ftc.gov
General Counsel
Federal Trade Commission
600 Pennsylvania Ave, N.W.
Washington, DC 20580

TABLE OF CONTENTS

CONCLUSIONS OF LAW ............................................ -1

I. NATURE OF THE ACTION, JURISDICTION AND VENUE .................. -1

II. THE STANDARD FOR A PRELIMINARY INJUNCTION – SERIOUS AND
SUBSTANTIAL QUESTIONS GOING TO THE MERITS – IS MET HERE ...... -2

III. IN EVALUATING THE QUALITY OF THE EVIDENCE, THE COURT SHOULD
DISCOUNT DEFENDANTS’ MADE-FOR-LITIGATION EVIDENCE .......... -4

IV. PREMIUM NATURAL AND ORGANIC SUPERMARKETS IS A RELEVANT
PRODUCT MARKET.................................................. -5

V. THE RELEVANT GEOGRAPHIC MARKET IS LOCAL .................... -10

VI. THIS COMBINATION IS PRESUMPTIVELY ILLEGAL .................... -11

A. The Speculative Prospect of Repositioning Is Insufficient to Obviate the
Anticompetitive Effects of the Acquisition ........................... -13

B. Defendants Have Not Demonstrated That the Alleged Cost Savings from the
Transaction Will Counteract its Anticompetitive Effects ................ -14

C. The “Flailing Firm” Defense is Unavailable .......................... -16

VII. THE ACQUISITION WOULD RESULT IN A SIGNIFICANT LESSENING OF
COMPETITION ..................................................... -17

VIII. INJUNCTIVE RELIEF IS NECESSARY HERE ............................ -19

-ii

CONCLUSIONS OF LAW

I. NATURE OF THE ACTION, JURISDICTION AND VENUE
1. This is an action pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), by which
the Federal Trade Commission (“FTC” or “the Commission”) seeks a preliminary
injunction against the acquisition of Wild Oats by Whole Foods.

2. This Court has jurisdiction over the subject matter of this action, seeking preliminary
injunctive relief pending administrative adjudication of the underlying merits of whether
the acquisition violates the Clayton Act § 7, 15 U.S.C. § 18, or Federal Trade
Commission Act (“FTC Act”) § 5, 15 U.S.C. § 45. FTC Act § 13(b), 15 U.S.C. § 53(b).

3. This Court has jurisdiction over the persons of defendants. Wild Oats Answer ¶ ¶ 9, 10;
Whole Foods Answer ¶ 9, 10; see 15 U.S.C § 53(b).

4. The FTC is vested with authority and responsibility for enforcing, inter alia, Section 7 of
the Clayton Act, 15 U.S.C. § 18. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b),
authorizes the FTC to seek a preliminary injunction in order to enforce Section 7 of the
Clayton Act.

5. The proposed acquisition is a transaction subject to Section 7 of the Clayton Act, 15
U.S.C. § 18, and Section 5 of the FTC Act, 15 U.S.C. § 45.

6. At all times relevant herein, defendants Whole Foods Market, Inc. and Wild Oats
Markets, Inc. are each engaged in “commerce,” as defined in Section 4 of the FTC Act,
15 U.S.C. § 44 and Section 1 of the Clayton Act, 15 U.S.C. § 12. Wild Oats Answer ¶ ¶
9; Whole Foods Answer ¶ 9.

7. Venue is proper in this district under Section 13(b) of the FTC Act and 28 U.S.C.
§ 1391(c). See Whole Foods Answer ¶ 9.

8. The FTC has jurisdiction, pursuant to Section 11 of the Clayton Act, 15 U.S.C. § 21, to
bring administrative proceedings against the proposed merger challenged in this action.
The Commission has jurisdiction to issue a cease and desist order, after an administrative
hearing on the merits, against defendants Whole Foods and Wild Oats, if the Commission
determines that consummation of the proposed merger would violate Section 7 of the
Clayton Act. FTC v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 45 (D.D.C. 1998).

9. This Court has jurisdiction, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53 (b),
to issue a preliminary injunction against Whole Foods and Wild Oats, enjoining their
proposed merger.

II. THE STANDARD FOR A PRELIMINARY INJUNCTION – SERIOUS AND
SUBSTANTIAL QUESTIONS GOING TO THE MERITS – IS MET HERE

10. Section 13(b) of the FTC Act provides that a preliminary injunction may be granted
"upon a proper showing that, weighing the equities and considering the Commission's
likelihood of ultimate success, such action would be in the public interest."

11. Section 13(b) of the FTC Act imposes a two-part "public interest" standard for a court to
use in order to determine whether a preliminary injunction should be granted. FTC v.
H.J. Heinz Co., 246 F.3d 708, 714 (D.C. Cir. 2001); Cardinal Health, 12 F. Supp. 2d at
44.

12. Under this standard, this Court should: (1) determine the likelihood that the Commission
will ultimately succeed on the merits in its case under Section 7 of the Clayton Act, and
(2) balance the equities. Heinz, 246 F.3d at 714; FTC v. University Health, Inc., 938 F 2d
1206, 1217-18 (11th Cir. 1991). This standard differs from the traditional four-part test
for preliminary injunctive relief applicable to suits brought by private parties. 11A
Wright, Miller and Kane, Federal Practice and Procedure § 2948 at 131-33.

13. In this suit for preliminary relief, the Commission is not required to prove that, and the
Court is not required to make a final determination on whether, defendants' proposed
merger would violate Section 7 of the Clayton Act. Heinz Co., 246 F.3d at 714, citing
FTC v. Food Town Stores, Inc., 539 F.2d 1339, 1342 (4th Cir. 1976); Cardinal Health,
12 F. Supp. 2d at 45 . The determination of whether the acquisition actually violates the
antitrust laws is reserved for the Commission and is not before the Court. FTC v. Staples,
Inc., 970 F. Supp. 1066, 1071 (D.D.C. 1997). Nor is the Court required to resolve all
conflicts in the evidence, or to conduct an extensive analysis of all the antitrust issues.
Those matters are reserved to the Commission (subject to appellate review), upon
completion of administrative proceedings before the Commission, including a full trial on
the merits. In the instant proceeding, the Court's task is to make a preliminary
assessment of the proposed merger's effect on competition. FTC v. Alliant Techsystems,
808 F. Supp. 9, 19 (D.D.C. 1992).

14. The Commission satisfies its burden to show likelihood of success if it "raises questions
going to the merits so serious, substantial, difficult, and doubtful as to make them fair
ground for thorough investigation, study, deliberation and determination by the
Commission in the first instance and ultimately by the Court of Appeals.” University
Health, 938 F.2d at 1218; FTC v. Warner Communications, 742 F.2d 1156, 1162 (9th
Cir. 1984) (quoting FTC v. National Tea Co., 603 F.2d 694, 698 (8th Cir. 1979)); Alliant
Techsystems, 808 F. Supp. at 19.

15. In deciding whether a significant showing has been made, doubts are to be resolved
against the transaction and in favor of a preliminary injunction. FTC v. Elders Grain,
868 F.2d 901, 906 (7th Cir. 1989) (citing Philadelphia Nat’l Bank, 374 U.S. 321, 362-63
(1962)).

16. Section 7 of the Clayton Act prohibits mergers that “may . . . substantially lessen
competition, or tend to create a monopoly.” 15 U.S.C. § 18.

17. Section 7 of the Clayton Act is concerned with preventing the creation or enhancement of
market power. FTC v. Proctor & Gamble Co., 386 U.S. 568, 577 (1967); United States
v. Archer-Daniels-Midlands, Corp., 866 F.2d 242, 246 (8th Cir. 1988), cert. denied, 493
U.S. 809 (1989). The lawfulness of an acquisition turns on the purchaser’s “potential for
creating, enhancing, or facilitating the exercise of market power -- the ability of one or
more firms to raise prices above competitive levels for a significant period of time.” Id.

18. The focus of Section 7 is on arresting anticompetitive mergers “in their incipiency”
(Brown Shoe Co. v. United States, 370 U.S. 294, 317 (1962)) and thus requires a
prediction as to the merger’s impact on future competition. Philadelphia Nat’l Bank, 374
U.S. at 362. Because Section 7 addresses the probable future effects of an acquisition, it
necessarily requires predictions and inherently “deals in probabilities, not certainties.”
Brown Shoe., 370 U.S. at 323. Accordingly, to establish a violation, the government
need show only a reasonable probability, not a certainty, that the proscribed
anticompetitive activity may occur. University Health, 938 F.2d at 1218; see Hospital
Corp. of Am. v. FTC, 807 F.2d 1381, 1389 (7th Cir. 1986), cert. denied, 481 U.S. 1038
(1987).

19. Analysis of the likely competitive effects of a merger requires determinations of (1) the
“line of commerce” or product market in which to assess the transaction; (2) the “section
of the country” or geographic market in which to assess the transaction; and (3) the
transaction's probable effect on competition in the product and geographic markets. See
United States v. Marine Bancorporation, 418 U.S. 602, 618-23 (1974); FTC v. Harbour
Group Investments, L.P., 1990-2 Trade Cas. (CCH) ¶ 69,247 at 64,914 n.3 (D.D.C.
1990).

20. Evidence establishing undue concentration in the relevant market makes out the
government’s prima facie case and gives rise to a presumption of unlawfulness.
Philadelphia Nat’l Bank, 374 U.S. at 363; Cardinal Health, 12 F. Supp. 2d at 52; see
also United States v. General Dynamics Corp., 415 U.S. 486, 497 (1974), quoting
Aluminum Co. of Am., 377 U.S. 271, 279 (1964) (“if concentration is already great, the
importance of preventing even slight increases in concentration is correspondingly
great.”).

III. IN EVALUATING THE QUALITY OF THE EVIDENCE, THE COURT SHOULD
DISCOUNT DEFENDANTS’ MADE-FOR-LITIGATION EVIDENCE

21. In defining markets, courts and the antitrust agencies normally look at all available
evidence, including in particular the ordinary course of business documents of the
merging parties, e.g., Warner Communications, 742 F.2d at 1163 (“record company
documents”); Cardinal Health, 12 F. Supp. 2d at 49; Staples, 970 F. Supp. at 1076; Olin
Corp., 113 F.T.C. 400, 597 (1990), aff’d sub nom. Olin Corp. v. FTC, 986 F.2d 1295 (9th
Cir. 1993), cert. denied, 510 U.S. 1110, 114 S. Ct. 1051 (1994); and on the testimony of
competitors and customers (including intermediate purchasers such as retailers). E.g.,
FTC v. PPG Indus., 798 F.2d 1500, 1504 (D.C. Cir. 1986) (“buyers’ and sellers’
perceptions”); Reynolds Metal Co. v. FTC, 309 F.2d 223, 228-29 (D.C. Cir. 1962);
Warner Communications, 742 F.2d at 1163; Borden v. FTC, 674 F.2d 498, 507-08 (6th
Cir. 1982) (“buyers for large supermarket chains and representatives of processed lemon
juice companies”).

22. Documents created by the merging parties prior to litigation are most probative as to the
likely competitive impact of a transaction. In Heinz, the DC Circuit noted that
“Heinz's own documents recognize the wholesale competition and
anticipate that the merger will end it. Indeed, those documents disclose
that Heinz considered three options to end the vigorous wholesale
competition with Beech-Nut: two involved innovative measures while the
third entailed the acquisition of Beech-Nut. Heinz chose the third, and
least pro-competitive, of the options.” 246 F.3d at 717 (citations to record
omitted).

23. Documents from the defendants’ own files -- exposing the “business reality” of “how the
market is perceived by those who strive to profit in it” -- support finding a PNOS product
market. PFF 33-40, 49-61, 333-336. Cf. FTC v. PPG Indus., 628 F. Supp. 881, 884 n.5
(D.D.C.), aff’d, 798 F.2d 1500 (D.C. Cir. 1986); Reynolds Metal, 309 F.2d at 228-29
(finding florist foil to be a product market separate from other types of aluminum foil
based on, inter alia, evidence in company documents); Community Publrs. v. Donrey
Corp., 892 F. Supp. 1146, 1153-54 (W. D. Ark. 1995) (when firms routinely concentrate
on some presumptively competitive products and ignore others, they may be providing a
practical assessment of the products that are inside or outside the relevant product
market); California v. American Stores, 697 F. Supp. 1125, 1129 (C.D. Cal. 1988)
(supermarkets), aff’d in part and rev'd on other grounds, 872 F.2d 837 (9th Cir. 1989),
rev'd on other grounds, 495 U.S. 271 (1990) (“[T]he State has presented evidence that
defendants’ own marketing documents focus on supermarket shoppers and competition
from other supermarkets and do not evaluate convenience stores, gasoline service
stations, etc. as competitors.”).

24. Defendants’ presentation of evidence that other retailers sell some organic or natural
products and believe they “compete” with premium natural and organic supermarkets
does not establish a broader market. The mere fact that two different classes of retail
vendors both sell a particular type of merchandise does not mean that they are in the
same product market. American Stores, 697 F. Supp at 1129 (“[e]ven if convenience
stores competitively price a few food items, such as bread and milk, in direct competition
with supermarkets, such is not sufficient to justify inclusion of all retail grocery sales
from whatever outlet in the relevant product market”).

25. Defendants’ business records and testimony reflect defendants’ intense efforts to
maintain a premium distinction that distinguishes their stores from conventional
supermarkets and other food retailers. PFF 44-142. Defendants’ numerous internal
documents show the interaction of their unique price and nonprice competition within the
market with disregard to participants in the larger market. PFF 337-366. Those
documents are far more probative of the “business reality” of the market than the
defendants’ self-serving, post-Complaint employee declarations.

26. Defendants’ made-for-litigation declarations are entitled to little weight to the extent they
are “in conflict with contemporaneous documents.” United States v. Gypsum Co., 333
U.S. 364, 396 (1948).
IV. PREMIUM NATURAL AND ORGANIC SUPERMARKETS IS A RELEVANT
PRODUCT MARKET

27. A relevant product market defines the product boundaries within which competition
meaningfully exists. United States v. Continental Can Co., 378 U.S. 441, 449 (1964).
“The outer boundaries of a product market are determined by the reasonable
interchangeability of use [by consumers] or the cross-elasticity of demand between the
product itself and substitutes for it.” Brown Shoe, 370 U.S. at 325; see also United States
v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395 (1956).

28.Although the Horizontal Merger Guidelines issued by the Federal Trade Commission and
the U.S. Department of Justice (“Merger Guidelines”) (PX01310) are not binding on the
courts, courts have considered them in determining the impact on competition of a
proposed acquisition. See PPG, 798 F.2d at 1503; University Health, 938 F.2d at 1211
n.12; Olin, 986 F.2d at 1299; FTC v. Swedish Match N. Am., Inc., 131 F. Supp. 2d. 151,
160, 168, n.11, n.12 (D.D.C. 2000); Cardinal Health, 12 F. Supp. 2d at 53 (measuring
market shares), 55-58 (analyzing entry), 61-62 (analyzing efficiencies).
29. The analytical framework set forth in the Merger Guidelines simulates the inquiry
regarding the reasonable interchangeability of use or cross-elasticity of demand by asking
whether a “hypothetical monopolist . . . would profitably impose at least a ‘small but
significant and nontransitory’ increase in price” (“SSNIP”). Merger Guidelines § 1.11
(PX01310). The Merger Guidelines approach is routinely applied by courts in their
market definition exercises. E.g., Cardinal Health, 12 F. Supp. 2d at 46 (“[T]he Court
must determine whether . . . there is reason to find that if the [d]efendants were to raise
prices after the proposed merger[], their customers would switch to alternative sources of
supply to defeat the price increase.”). Accord, Archer-Daniels-Midland Co., 866 F.2d at
246 (“[T]hese concepts help evaluate the extent competition constrains market power and
are, therefore, indirect measurements of a firm’s market power.”).

30. A one (1) percent SSNIP in certain product markets, such as here, is appropriate to use
for market definition purposes. The Merger Guidelines speak of a five (5) percent SSNIP
test but recognize that in some cases depending on the industry it is appropriate to use a
smaller percentage. Merger Guidelines § 1.11 (PX01310). Defendants’ own expert
economist acknowledges that for retail markets characterized by high volume of sales but
low profit margin per dollar of sales, a hypothetical price increase as low as 1% may be
appropriate. See Expert Report of David T. Scheffman, Ph.D.,¶ 114 (PX02066) (“Given
the relatively low net profit margins (e.g., income to sales) associated with supermarket
retailing, it is common to use a small hypothetical price increase, because a larger
increase in price would lead to implausibly large margins given what we know about
supermarket margins.”); David Scheffman, Comments at “Grocery Store Antitrust:
Historical Retrospective and Current Developments,” May 24, 2007, (PX00322); see also
Harris & Jorde, Market Definition in the Merger Guidelines: Implications for Antitrust
Enforcement, 71 Cal. L. Rev. 464, 482 (1983) (“In the high-volume grocery business . . .
net income typically represents 0.5% of sales, so a 5% increase in price would represent a
1000% increase in profit . . . . the managers of any recently merged grocery firm would
know better than to try to raise prices by 5% across the board.”); FTC Bureau of
Economics, “The Petroleum Industry, Mergers, Structural Change and Antitrust
Enforcement (August 2004),” (PX00330 at 22 & n.13) (“The FTC staff frequently has
used a one-cent-per gallon price increase in defining relevant markets for petroleum
mergers”).

31. Market definition is designed to distinguish close competitive constraints from those
more distant to assess whether the acquisition significantly reduces competition between
or among close constraints. See, e.g., 4 P. Areeda, H. Hovenkamp & J. Solow, Antitrust
Law ¶ 929c (rev. ed. 1998) (hereinafter “Areeda”)

32. The fact that a product has some constraining effect on another product or similar
functionality does not necessarily mean that they are in the same relevant market. In
markets where the products are differentiated (i.e., the products are not perfect substitutes
for one another), competition may be localized, meaning individual sellers compete more
directly with those competitors selling close substitutes. Staples, 970 F. Supp. at 1075
(“[T]he mere fact that a firm may be termed a competitor in the overall marketplace does
not necessarily require that it be included in the relevant product market for antitrust
purposes.”).

33. This Court in Staples observed: “[a]s other courts have noted, use of the term
“submarket” may be confusing. Whatever term is used – market, submarket, relevant
product market – the analysis is the same.” Staples, 970 F. Supp. at 1080 n.11 (citations
omitted).

34. Within the broad range of “reasonably interchangeable” products, “well-defined
submarkets may exist which, in themselves, constitute product markets for antitrust
purposes.” Brown Shoe, 370 U.S. at 325, citing E.I. du Pont de Nemours, 353 U.S. at
593-95; see Staples, 970 F. Supp. at 1075-81 (finding submarket of office supply
superstores within broader market of sale of office supplies). See also Merger Guidelines
§ 2.21 (PX01310); Murphy Report (PX02878 at 004).

35. Even firms enjoying monopoly power may be constrained in their pricing by other
products -- but that constraint does not mean that the firm lacks monopoly power. See
2A Areeda, Antitrust Law, ¶ 506a (2d Ed. 2002) (“As Judge Learned Hand put it,
“substitutes are available for almost all commodities, and to raise the price enough is to
evoke them.” [footnote omitted] But, as he further noted, the existence of substitutes
does not necessarily preclude “monopoly” power. It depends on how close the
substitutes are in the minds of buyers, on how many buyers consider them to be close,
and upon the price-output decisions of those producing the substitutes.”) paraphrasing
Aluminum Co. of Am., 148 F.2d 416, 426 (2d Cir. 1945). See Jonathan Baker, Unilateral
Competitive Effects Theories in Merger Analysis, 11 Antitrust L.J. 21, 24-25 (1997)
(imperfect substitutes in pharmacy networks and cable television insufficient to constrain
post-merger market power).

36. “[I]t is ordinarily quite difficult to measure cross-elasticities of supply and demand
accurately. Therefore, it is usually necessary to consider other factors that can serve as
useful surrogates for cross-elasticity data.” U.S. Anchor Mfg., Inc. v. Rule Indus., Inc.,
7 F.3d 986, 995 (11th Cir. 1993), quoting In re Int’l Tel. & Tel. Corp., 104 F.T.C. 280,
286 (FTC 1984). Since it can be quite difficult to measure cross-elasticity directly,
evidence of cross-elasticity may not be available and other evidence may be used as
surrogate. Swedish Match, 131 F. Supp. 2d at 160-61.

37. Because it is usually difficult to measure cross-elasticities of demand, courts also have
identified “practical indicia” of product market boundaries, such as
industry or public recognition of the submarket [or market] as a
separate economic entity, the product’s particular characteristics
and uses, unique production facilities, distinct customers,
sensitivity to price changes, and specialized vendors.

Brown Shoe, 370 U.S. at 325; see also Cardinal Health, 12 F. Supp. 2d at 46; Staples,
970 F. Supp. at 1075. These “practical indicia” are “evidentiary proxies for direct proof
of substitutability” among products. Rothery Storage & Van Co. v. Atlas Van Lines, 792
F.2d 210, 218 (D.C. Cir. 1986).

38. One of the Brown Shoe indicia, public recognition of the market, includes within it the
basic notion that consumer preferences, i.e., demand for a product or service, no matter
how subjective or fickle, define a relevant market. Indeed, this goes to the heart of the
mechanics used by the Merger Guidelines to define markets. Merger Guidelines § 1.0
(PX01310) (“Market definition focuses solely on demand substitution factors – i.e.,
possible consumer responses.”).

39. Another one of the Brown Shoe indicia, distinct prices, recognizes that higher priced or
premium products or services may belong in separate relevant markets. See Rebel Oil
Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1436 (9th Cir. 1995) (“A price differential
between two products may reflect a low cross-elasticity of demand, if the higher priced
product offers additional service for which consumers are willing to pay a premium.”)

40. Relevant product markets often are defined with reference to the type of store at issue.
See Staples, 970 F. Supp. at 1074-77 (office superstores constitute a relevant product
market despite sale of many of the same products through other retail channels);
Photovest v. Fotomart, 606 F.2d 704 (7th Cir. 1979) (relevant market of “drive-thru retail
photo processing” based on consumer perception that drive-thru offered greater
convenience and service); American Stores, 872 F.2d at 840 (supermarkets comprised a
relevant submarket–exclusive of convenience stores, smaller independent grocery stores
and other food retailers–because supermarkets are the only retailers that meet consumers'
needs for variety); see also Columbia Broad. Sys., Inc. v. FTC, 414 F.2d 974 (7th Cir.
1969) (relevant market for records sold through mail-order subscription services).

41. Relevant product markets are often defined as a service or group of services. Merger
Guidelines § 1.0 (PX01310).

42. Numerous courts have held that a “cluster” of products and services may be a relevant
product market, based on the benefit to consumers accruing from the convenience of
purchasing complementary products from a single supplier. Supermarkets, department
stores, office superstores, commercial banks, and hospitals are a few examples. Staples,
970 F. Supp. at 1066 (office superstores); Philadelphia Nat'l Bank 374 U.S. at 356
(banking services); American Stores, 697 F. Supp. at 1129 (supermarkets); Hospital
Corp., 807 F.2d at 1389. See also United States v. Grinnell Corp., 384 U.S. 563, 572-73
(1966) (central station protective services for burglary protection, fire protection and
other services); General Indus. Corp. v. Hartz Mountain Corp., 810 F.2d 795, 805 (8th
Cir. 1987) (pet supplies); Alliant Techsystems, 808 F. Supp. at 20 (munitions systems); In
re Hospital Corp. of Am., 106 F.T.C. 361, 434-37, 465-66 (1985) (acute inpatient
hospital services), aff’d, 807 F.2d 1381 (7th Cir. 1986), cert. denied, 481 U.S. 1038

(1987).

43. Market definition is a fact-intensive exercise that turns on the marketplace realities in
each case. Precedent regarding methodology and economics is relevant, but market
definition remains a factual finding. See Weiss v. York Hosp., 745 F.2d 786, 825 (3d Cir.
1984) (“Market definition is question of fact . . . .”); General Indus., 810 F.2d at 805 (8th
Cir. 1987) (in defining a market, “the reality of the marketplace must serve as the
lodestar”).

44. The decisions in United States v. Oracle, 331 F. Supp. 2d 1098 (N.D. Cal. 2004), and
Staples, 970 F. Supp. at 1072–77, illustrate the fact-intensive inquiry required to define
an antitrust market. In Oracle, the court discussed several relevant factors: (1) the
merging firms’ products are differentiated from one another; (2) the merging firms’
products are close substitutes for each other; (3) other products are sufficiently different
from the merging firms’ products that a merger would make a small but significant and
non-transitory price increase profitable for the merging firms; and (4) repositioning by
the non-merging firms is unlikely. Id.; cf. Merger Guidelines, § 2.21 (PX01310);
Hovenkamp, Federal Antitrust Policy § 12.7a2 (1994). The Oracle legal analysis is
fundamentally the same as in Staples. While defendants in Staples, like the defendant in
Oracle, maintained that the market definition was “contrived” with no basis in law or
fact, Staples, 970 F. Supp. at 1073, this Court in Staples properly focused on the parties’
recognition of competition among superstores. The Oracle decision also emphasized the
difficulty of drawing lines between competitors in the software industry. Here, as in
Staples, the lines are much easier to discern. See, e.g., Staples, 970 F. Supp. at 1079
(“the unique combination of size, selection, depth and breadth of inventory offered by the
superstores distinguishes them from other retailers”).

45. The fact that conventional supermarkets carry some natural and organic products does
not by itself establish that conventional supermarkets and premium natural and organic
supermarkets belong in the same relevant product market. American Stores, 697 F. Supp
at 1129 (“[e]ven if convenience stores competitively price a few food items, such as
bread and milk, in direct competition with supermarkets, such is not sufficient to justify
inclusion of all retail grocery sales from whatever outlet in the relevant product market”).

46. Markets need not be defined with scientific precision. In Judge Posner's words,
defendants seek to engage the Court in “a hunt for the snark of delusive exactness.” Blue
Cross & Blue Shield United v. Marshfield Clinic, 65 F.3d 1406, 1411 (7th Cir. 1995),
cert. denied, 516 U.S. 1184 (1996). Indeed, “[t]he tendency to see relevant market
definition as an all-or nothing proposition rather than as an array of estimates with no
market description being exactly right has led to the most serious errors in antitrust
enforcement.” Robert Pitofsky, New Definitions of Relevant Market and the Assault on
Antitrust, 90 Colum. L. Rev. 1805, 1812-13 (1990).

47. The proper focus in product market definition is not on whether other retailers sell some
of the same products or believe that they “compete” in a very broad sense, but whether a
sufficient number of consumers would defect to these alternatives to make a small but
significant price increase by the PNOS stores unprofitable. U.S. Anchor Mfg., 7 F.3d at
995.

48. Evidence shows premium natural and organic supermarkets are constrained by each other
in ways in which they are not constrained by any other retailers. Conventional
supermarkets and mass merchants cannot effectively constrain premium natural and
organic supermarkets because they cannot replicate the blend of characteristics of the
premium natural and organic supermarkets. PFF 154-246, 323-336. The econometric
work preformed by Professor Murphy corroborates this conclusion. PFF 251, 254, 262,
293, 297.

49. The lynchpin for defendants' defense is that the product market includes conventional
supermarkets, and for this they highlight the one-day, non-statistical study from their
expert economist. PFF 420-421. However, this study has no more validity than a study
rejected by the D.C. Circuit in Heinz:
Moreover, the number of data points on the chart were few; they were limited to
launches in a single year. . . . Assessing such data's statistical significance in
establishing the proposition at issue. . . is thus highly speculative. The district
court did not even address the question of the data's statistical significance and the
appellees' counsel could offer no help at oral argument.

Heinz, 246 F.3d at 723. In contrast, the Commission’s case relies on contemporary
business documents and statistically sound economic analysis. PFF 33-40, 49-61, 247

332.

50. The operation of premium natural and organic supermarkets constitutes a relevant
product market under the antitrust laws and a “line of commerce” within the meaning of
Clayton Act § 7, 15 U.S.C. § 18.

V. THE RELEVANT GEOGRAPHIC MARKET IS LOCAL

51. Section 7 of the Clayton Act prohibits acquisitions that are likely to lessen competition in
“any section of the country,” otherwise known as a geographic market. Philadelphia
Nat'l Bank, 374 U.S. at 357.

52. The relevant geographic market is that geographic area "to which consumers can
practically turn for alternative sources of the product and in which the antitrust
defendant[s] face[] competition.” Staples, 970 F. Supp. at 1073 (quoting Morgenstern v.
Wilson, 29 F.3d 1291, 1296 (8th Cir. 1994), cert denied, 523 U.S. 1150 (1995)).

53. The relevant geographic market is the area that would be adversely affected by the
proposed acquisition. Philadelphia Nat’l Bank, 374 U.S. at 357.

54. The relevant geographic market must “correspond with the commercial realities of the
industry. . . .” Brown Shoe, 370 U.S. at 336.

55. As with product market, the geographic boundaries of a relevant market do not need to be
defined with precision. Cardinal Health, 12 F. Supp at 49, citing United States v.
Connecticut National Bank, 418 U.S. 656, 669 (1966); United States v. Pabst Brewing
Co., 384 U.S. 546, 549 (1966) (“[t]he geographic market need not be identified with
‘scientific precision’” or “by metes and bounds as a surveyor would lay off a plot of
ground.”). See also United States. v. General Dynamics Corp., 415 U.S. 486, 521 (1974)
(“the Government is not required to delineate § 7 markets by ‘metes and bounds.’”).

56. The FTC is likely to establish, after an administrative trial on the merits, that the relevant
geographic markets are 25 local areas: Albuquerque, NM; Boston, MA; Boulder, CO;
Hinsdale, IL (suburban Chicago); Evanston, IL (suburban Chicago); Cleveland, OH;
Denver, CO; Fairfield County, CT; West Hartford, CT; Henderson, NV; Kansas City-
Overland Park, KS; Las Vegas, NV; Los Angeles, CA; Louisville, KY; Naples, FL;
Nashville, TN; Omaha, NE; Miami Beach, FL; Palo Alto, CA; Pasadena, CA; Portland,
ME; Portland, OR; Reno, NV; Salt Lake City, UT; and St. Louis, MO. PFF 457-511.
VI.
THIS COMBINATION IS PRESUMPTIVELY ILLEGAL

57. Mergers that significantly increase market concentration are presumptively unlawful
because the fewer the competitors and the larger the respective market shares, the greater
the likelihood that a single firm or a group of firms could raise prices above competitive
levels. Philadelphia Nat’l Bank, 374 U.S. at 363; PPG, 798 F.2d at 1502-03; Cardinal
Health, 12 F. Supp. 2d at 52 (“under Section 7 of the Clayton Act, a prima facie case can
be made if the government establishes that the merged entities will have a significant
percentage of the relevant market–enabling them to raise prices above competitive
levels”); Hospital Corp., 807 F.2d at 1389; Merger Guidelines § 2.0 (PX01310).

58. The Supreme Court explained the rationale for this principle in U.S. v. General Dynamics
Corp., 415 U.S. 486, 497 (1974):
The effect of adopting this approach to a determination of a
“substantial” lessening of competition is to allow the Government
to rest its case on a showing of even small increases of market
share or market concentration in those industries or markets where
concentration is already great or has been recently increasing,
since “if concentration is already great, the importance of
preventing even slight increases in concentration is
correspondingly great.” Alcoa, 377 U.S. at 279, 84 S. Ct. 1283,

1289, citing Philadelphia Nat’l Bank, 374 U.S. at 365, n.42, 835 S.
Ct. 1715, 1743 n.42.

59. Concentration typically is measured using the Herfindahl-Hirschman Index (“HHI”).
The HHI is calculated by summing the squares of the market shares of each participant,
so as to give greater weight to the market shares of larger firms in accord with their
relative importance in competitive interactions. Merger Guidelines § 1.5 (PX01310).
Courts have adopted and relied on the HHI as a measure of market concentration. E.g.,
Cardinal Health, 12 F. Supp. 2d at 53-54; Staples, 970 F. Supp. at 1081-82; PPG, 798
F.2d at 1503; University Health, 938 F.2d at 1211 n.12 (HHI is “most prominent method”
of measuring market concentration); U.S. v. Ivaco, 704 F. Supp. 1409, 1419 (W.D. Mich.
1989).

60. Where the post-acquisition HHI exceeds 1800 points, it is “presumed that mergers
producing an increase in the HHI of more than 100 points are likely to create or enhance
market power or facilitate its exercise.” Merger Guidelines § 1.51 (PX01310). Courts
have adopted similar thresholds. See Cardinal Health, 12 F. Supp. 2d at 53.

61. Where a merger may result in a monopoly, the presumption of anticompetitive effects is
greatest. 3A Areeda, Antitrust Law ¶ 701c (rev. ed. 1998).

62. The FTC has established that the proposed merger will increase concentration in the
relevant markets significantly. The proposed merger will result in a premium natural and
organic supermarket monopoly in 17 local areas. PFF 463-511. In Portland, Oregon, the
number of premium natural and organic supermarket competitors will be reduced from
three to two, which is still an extraordinarily high concentration. PFF 498-499. Post-
merger, the concentration levels in these very highly concentrated markets jump to the
theoretical limit, an HHI of 10,000.

63. The FTC need only demonstrate an anticompetitive effect in one relevant geographic
market in which Defendants compete to prove a violation of Section 7. Pabst Brewing,
384 U.S. at 549 (“[t]he Government may introduce evidence which shows that as a result
of a merger competition may be substantially lessened throughout the country, or on the
other hand it may prove that competition may be substantially lessened only in one or
more sections or the country. In any event a violation of § 7 would be proved.”)
(emphasis added).

VI. EVIDENCE PRESENTED BY DEFENDANTS DOES NOT REBUT THE
PRESUMPTION OF LIKELY ANTICOMPETITIVE EFFECTS OF THE
MERGER

64. Once a prima facie violation is established, “the defendants must produce evidence that
‘shows that the market-share statistics [give] an inaccurate account of the [merger's]
probable effects on competition" in the relevant market.” Heinz, 246 F.3d at 715

(quoting United States v. Citizens & S. Nat'l Bank, 422 U.S. 86, 120 (1975)); Cardinal
Health, 12 F. Supp. 2d at 54. If defendants offer evidence to rebut the presumption from
concentration and market share, the burden returns to the Commission to prove that the
merger is likely to reduce competition. Heinz, 246 F.3d at 715. By proving that the
acquisition will increase concentration significantly in premium natural and organic
supermarkets, the burden of production shifts to the defendants to rebut this presumption
of anticompetitive harm. Marine Bancorporation, 418 U.S. at 631; Heinz, 246 F.3d
at 715.

65. In order “to meet this burden, the defendants must show that the market share statistics
“give an inaccurate prediction of the proposed acquisition’s probable effect on
competition.” Swedish Match, 131 F. Supp. 2d at 167, quoting Staples, 970 F. Supp.
at 1083.

66. Courts have examined evidence of ease of entry, Cardinal Health, 12 F. Supp. 2d at 5458;
United States v. United Tote, Inc., 768 F. Supp. 1064, 1071-82 (D. Del. 1991); see
Heinz, 246 F.3d at 715 n.7; and efficiencies, Heinz, id. at 720-22; Staples, 970 F. Supp.
at 1086-88; among other issues, in considering whether the market share statistics “give
an inaccurate prediction of the proposed acquisition’s probable effect on competition.”
Cardinal Health, 12 F. Supp. 2d at 54, quoting Staples, 970 F. Supp. at 1083.

67. High levels of concentration establish a strong prima facie case. “[T] he more compelling
the prima facie case, the more evidence the defendant must present to rebut it
successfully.” Heinz, 246 F.3d at 725, quoting Baker Hughes, 908 F.2d at 991. The
mergers to monopoly in most local markets create the strongest prima facie case.
68. Defendants have not produced significant evidence rebutting the presumption of
violation. Cardinal Health, 12 F. Supp. 2d at 54; Staples, 970 F. Supp. at 1083.

A. The Speculative Prospect of Repositioning Is Insufficient to Obviate the
Anticompetitive Effects of the Acquisition

69. The burden of production is on Defendants to demonstrate that entry would resolve the
competitive concerns raised by the government. In Cardinal Health, the court found that
defendants had failed to come forward with enough evidence of sufficiency of entry (and
of likelihood of entry) to rebut the presumption created by the high concentration levels.
Cardinal Health, 12 F. Supp. 2d at 58.

70. To rebut the presumption of anticompetitive effects, defendants’ evidence must show that
a firm would enter, and that “entry into the market would likely avert the anticompetitive
effects from the acquisition.” Staples, 970 F. Supp. at 1086 (quoting Baker Hughes, 908
F.2d at 989); see Swedish Match, 131 F. Supp. 2d at 170; Cardinal Health, 12 F. Supp.
2d at 55.

71. Entry must be “timely, likely and sufficient in its magnitude, character and scope to deter
or counteract the competitive effects” of a proposed transaction. Merger Guidelines
§ 3.0 (PX01310); see Cardinal Health, 12 F. Supp. 2d at 55-58. (adopting “timely, likely,
and sufficient” test). See also United Tote, 768 F. Supp. at 1082 (finding entry
insufficient to constrain anticompetitive price increase).

72. Entry is timely only if a new entrant would have a significant market impact within two
years. Merger Guidelines § 3.2 (PX01310).

73. Entry is likely only if it would be profitable at premerger prices. Id. at § 3.3 (PX01310).

74. Entry is sufficient only if it would be on a large enough scale to replace the competition
that existed prior to the acquisition. Cardinal Health, 12 F. Supp. 2d at 58.

75. For entry to obviate concern about a merged entity’s market power, it must be so easy
that it “would likely avert anticompetitive effects from [the] acquisition.” Baker Hughes,
908 F.2d at 989; University Health, 938 F.2d at 1219-1220; Merger Guidelines § 3.0,
quoted with approval, Rebel Oil Co., 51 F.3d at 1440. Where entry is “difficult and
improbable,” that fact “largely eliminates the possibility that the reduced competition
caused by the merger will be ameliorated by new competition from outsiders and further
strengthens the FTC’s case.” Heinz, 246 F.3d at 717.

76. Conventional supermarkets, mass merchandisers, and other food retailers like Trader
Joe’s are unlikely to reposition to compete effectively with premium natural and organic
supermarkets. Repositioning would require them to dramatically change their operations:
1) by establishing a large, expensive distribution system to supply natural and organic
products; 2) by allocating substantially more selling space for perishables; and 3) by
focusing less on their customer base of price conscious shoppers in favor of customers
who can afford more value-priced natural and organic products. PFF 623-642.

77. The costs of entry into the market for premium natural and organic retailers are a
substantial deterrent. In order to compete effectively against a premium natural and
organic supermarket, a new entrant must locate and develop or buy a suitable site to open
a supermarket, establish a distribution system, and build its reputation and customer
loyalty. PFF 624, 625, 701. This endeavor would take more than two years.

78. It is defendants’ burden to rebut the presumption of illegality. University Health, 938
F.2d at 1213, 1218. The defendants have not satisfied this burden with respect to entry.
B. Defendants Have Not Demonstrated That the Alleged Cost Savings from the
Transaction Will Counteract its Anticompetitive Effects
79. To establish a valid efficiencies defense, Defendants’ claimed efficiencies must, as a
threshold matter, be “merger-specific” and “verifiable.” Merger Guidelines § 4

(PX01310).

80. Merger-specific means that the efficiencies must be “likely to be accomplished with the
proposed merger and unlikely to be accomplished in absence of either the proposed
merger or another means having comparable anticompetitive effects.” Merger
Guidelines § 4 (PX01310). The claimed efficiencies cannot be efficiencies that could “be
achieved by either company alone.” Heinz, 246 F.3d at 722.

81. The claimed efficiencies must also be verifiable. Merger Guidelines § 4 (PX01310).
Efficiencies must be subjected to “rigorous analysis” by the Court. Heinz, 246 F.3d at
720. This is because even “efficiencies projected reasonably and in good faith by the
merging firms may not be realized.” Merger Guidelines § 4 (PX01310). Moreover,
because “information relating to the efficiencies is uniquely in the possession of the
merging firms,” the merging firms carry the burden of proof on efficiencies and must
substantiate efficiency claims so that the Agency can verify by reasonable means the
likelihood and magnitude of each asserted efficiency, how and when each would be
achieved. . . how each would enhance the merging firm’s ability and incentive to
compete, and why each would be merger specific. Merger Guidelines § 4 (PX01310).

82. Even assuming the purported efficiencies from the acquisition were verifiable and merger
specific, the proffered efficiencies must “create a net economic benefit for the . . .
consumer” when balanced against the potential anticompetitive harm. United States v.
Rockford Memorial Corp., 717 F. Supp. 1251, 1291 (D. Ill. 1989); see Merger Guidelines
§ 4 (PX01310).

83. Efficiencies rarely, if ever, can justify a merger to monopoly. Cardinal Health, 12 F.
Supp. 2d at 63. As a general rule, “extraordinary efficiencies” will be required “where
the HHI is well above 1800 and the HHI increase is well above 100.” Heinz, 246 F.3d at
720 quoting 4A Areeda, Antitrust Law ¶ 971f, at 44.

84. Even if an efficiencies defense can be entertained, Defendants must show that the
“proven” efficiencies will be passed on and that they overwhelm any possible
anticompetitive effects of the merger. Cardinal Health, 12 F. Supp. 2d at 63; Staples,
970 F. Supp. at 1090-91.

85. Defendants failed to provide a rigorous analysis of the transaction’s efficiencies as
required by the Merger Guidelines. Instead of relying on verifiable estimations,
Defendants reached their purported benefits based on unverified assumptions and
PFF 771, 781.

86. Defendants’ estimated cost savings are unreliable. Although some cost savings are
likely, Defendants have failed to demonstrate that the merger will lead to any substantial
cost savings. Defendants’ projected general and administrative cost savings of
are not unverified but based on specified assumptions gleaned from
prior experience with acquisitions, therefore not calculated specifically for the current
transaction. PFF 787, 788.

87.The product cost savings that the defendants claim are largely speculative. Defendants
lack sufficient information to estimate any projected cost savings from renegotiating a
supplier contract, including if the contract can be negotiated. PFF 783, 782, 787.
88. Consequently, defendants’ showing here is the essence of the speculative and unverified
claims that courts have rejected out of hand in past cases. University Health, 938 F.2d at
1223.

89. Finally, defendants have failed to show that cost savings will be passed on, and produce a
significant economic benefit to consumers. United Tote, 768 F. Supp. at 1084-85
(efficiencies rejected because "there are no guarantees that these savings will be passed
on to the consuming public"); American Stores, 697 F. Supp. at 1132 (rejecting claim of
over $50 million in efficiencies since savings will not "invariably" be passed on to
consumers).

90. Thus, the merger-related efficiencies will not outweigh the substantial anticompetitive
effects of the merger and result in a more competitive market. University Health, 938
F.2d at 1222-23 (“significant economies and that these economies ultimately would
benefit competition, and hence, consumers.”); Ivaco, supra; United Tote, supra.

C. The “Flailing Firm” Defense is Unavailable

91. Courts recognize that the “flailing firm” doctrine is “probably the weakest ground of all
for justifying a merger.” University Health, 938 F.2d at 1221(citing Kaiser Aluminum &
Chem. Corp. v. FTC, 652 F.2d 1324, 1339 (7th Cir. 1981)).

92. A court should credit such a defense only in rare cases, when the defendant makes a
substantial showing that the acquired firm’s weakness, which cannot be resolved by any
competitive means, would cause that firm’s market share to fall to a level that would
undermine the government’s prima facie case. University Health, 938 F.2d at 1221.

93. In General Dynamics, the Supreme Court held that the reserves of one of the coal mining
parties to the merger “were either depleted or already committed by long-term contracts
with large customers, and that United Electric's power to affect the price of coal was thus
severely limited and steadily diminishing.” United States v. General Dynamics Corp.,
415 U.S. 486, 504-505 (1974). Similarly, in FTC v. Arch Coal, this Court held that
Triton, the mining company being acquired, was becoming “less and less of an active
competitor” because its coal reserves were becoming harder to mine and Triton’s North
Rochelle mine was due to exhaust its reserves in just seven and one half years. FTC v.
Arch Coal, Inc., 329 F. Supp. 2d 109, 156 (D.D.C. 2004). In contrast, Wild Oats faces no
such limitations of finite resources. PFF 720, 721, 725-740.

94. Moreover, in many other competitive dimensions, Triton – unlike Wild Oats – was
severely damaged or incapacitated as a competitor. First, Triton lost money in all but one
year of existence since its inception. Arch Coal, 329 F. Supp. 2d at 155. In contrast,
Wild Oats has usually delivered a net profit to its investors, and to the extent it has not,
its losses were largely due to non-cash accounting charges and not losses on operations.
PFF 728. Both Wild Oats’ recent performance and projected future performance
demonstrate a trend of continuous improvement. PFF 728, 729, 739, 740. Wild Oats has
consistently delivered a gross profit (i.e., its sales exceeded its cost of goods sold).

95. Second, Triton’s mining costs at its North Rochelle mine (one of only two) exceeded the
coal’s market value. Arch Coal, 329 F. Supp. 2d at 155. Because of Triton’s mining
costs, it was “wholly indifferent to competitors’ production levels or their likely
uncommitted tonnage in pricing its North Rochelle coal.” Arch Coal, 329 F. Supp. 2d at
147. In contrast, Wild Oats matches Whole Foods prices both historically and
prospectively. Wild Oats is not indifferent to its competitors’ activities, nor is it a high-
price competitor. PFF 527, 528, 532, 545-548, 523, 519, 522, 517.

96. Third, Triton could not obtain bank financing and did not have an adequate credit rating
to obtain even junk bond financing, a prerequisite for expansion. Arch Coal, 329 F.
Supp. 2d at 156. Here, Wild Oats has opportunities for further financing, including
in an unused credit facility that it believes it can expand to . PFF
730, 731, 738, 768. Wild Oats’ current plans are to continue to expand. PFF 731, 741

745.

97. Fourth, Triton made unsuccessful good faith efforts to elicit reasonable alternative offers
from “every potential purchaser worldwide” in addition to its acquirer, Arch, and the
Court found that it had “no realistic prospects for other buyers.” Arch Coal, 329 F. Supp.
2d at 157. See Merger Guidelines ¶ 5.1 (PX01310). Here, there is no evidence that Wild
Oats has been shopped to other possible purchasers and that there are no other companies
willing to purchase Wild Oats.

98. The “flailing firm” cases cited by Defendants are inapplicable to Wild Oats. See, e.g.,
United States v. Int’l Harvester Co., 564 F.2d 769, 775-76 (7th Cir. 1977) (precarious
financial condition and suppliers refusing to ship); FTC v. Nat’l Tea Co., 603 F.2d 694,
699 n.7 (8th Cir. 1979) (firm likely to leave the market absent the acquisition); United
States v. Consol. Foods Corp., 455 F. Supp. 108, 116 (E.D. Pa. 1978) (36% sales
decline).

VII. THE ACQUISITION WOULD RESULT IN A SIGNIFICANT LESSENING OF
COMPETITION

99. Closing a store, like a reduction in quantity, is tantamount to a price increase. In
Cardinal Health, 12 F. Supp. 2d at 63, this Court noted in issuing its preliminary
injunction preventing the merger of prescription drug wholesalers that “the driving force
behind removing excess capacity in the market was to ease pricing pressures and return
prices to ‘rational levels.’” Id. See also PPG, 798 F.2d at 1503 (a reduction in output
yielded supracompetitive prices); Antitrust Law Developments 87 (5th Ed. 2002)
(“Because the laws of supply and demand indicate an agreement to limit output is
tantamount to an agreement to fix price, courts have also applied the per se rule to an
agreement to limit production or set quotas . . .” (citing cases)); FTC v. Bass Bros.
Enters., 1984-1 Trade Cas. (CCH) ¶ 66,401 at *37-*38 (N.D. Ohio 1984) (reduction in
supply is anticompetitive).

100. Defendants have ignored facts that contradict their efficiency claims. While Whole
Foods asserts efficiencies from the improved profitability and quality of the acquired
Wild Oats stores, it plans to close Wild Oats stores. PFF 590, 466, 471,
473, 475, 478-480, 484, 486, 489, 491, 493, 495, 497, 499, 504, 506, 509, 511.

101. Whole Foods’ proffered explanation for acquiring Wild Oats as a preemptive acquisition
that would keep it out of the hands of other companies is not a cognizable efficiency
claim and cannot outweigh the anticompetitive effects of the proposed transaction. PFF
594-600. See In re B.F. Goodrich Co., Dkt No. 9159, Federal Trade Comm’n, 110
F.T.C. 207 (1988) (“Although Goodrich believed that Diamond duplicated rather than
complemented its own PVC capabilities, with "only a suggestion of synergy," it viewed
the acquisition as “an attractive defense against acquisition [of Diamond] by another
PVC producer.”) (emphasis added).

102. Defendants’ Whole Foods’ post merger plans to close Wild Oats stores will lessen
competition because the output of goods and services presently available in the stores
will be reduced. FTC v. Bass Bros. Enters., 1984-1 Trade Cas. (CCH) ¶ 66,041 at 68,614
(N.D. Ohio 1984) (postmerger plans to shut down acquired plants would diminish
productive capacity and lessen competition). Defendants rely on U.S. v. Long Island
Jewish Medical Center, 983 F.Supp 121, 149 (E.D.N.Y. 1997), where contrary to here, a
well-documented decreasing demand marked by “increasing empty hospital beds” might
justify closing a facility post merger. By contrast, it is undisputed that demand is
increasing here.

103. The proposed merger between Whole Foods and Wild Oats would also eliminate
significant future competition between the two firms. PFF 582-584, 500-511. Absent the
merger the firms would enter each other’s markets and that would lead to a
deconcentration of the market. Staples, 970 F. Supp. at1073 & n.6; Marine
Bancorporation, 418 U.S. at 631, 633; FTC v. Proctor & Gamble Co., 386 U.S. 568, 581
(1967).

104. Whole Foods and Wild Oats are current, actual competitors in premium natural and
organic supermarkets. PFF 464. The acquisition would eliminate that current, actual
competition as well as future competition. PFF 464, 500.

105. In a market with few players and no significant likelihood of entry, a merger that
eliminates one of a small number of players is a matter of great concern. Heinz, 246 F.3d
at 717 & n.13. Whole Foods and Wild Oats are the only two premium natural and
organic supermarkets currently competing in 17 relevant geographic markets. PFF 464.

106. The acquisition would result in the elimination of an aggressive competitor (Wild Oats)
in a highly concentrated market, which increases the risk that prices will rise after the
acquisition. FTC v. Food Town Stores, Inc., 539 F.2d 1339, 1345 (4th Cir. 1976)
(enjoining merger when merging firms have been “aggressive competitors in the past,”
opening up stores in each other’s markets and increasing sales by greater than the
industry sales average).

107. Because it would eliminate competition from Wild Oats, the merger is likely to increase
the merged firm’s ability to raise prices charged in premium natural and organic
supermarkets unilaterally. Swedish Match, 131 F. Supp. 2d. at 168-69; United Tote, 768
F. Supp. at 1071 (rejecting argument that merger would not reduce competition in light of
finding that merging firms were direct, significant competitors).
108. “[T]he fact that prices might be lower than current prices after the merger does not mean
that the merger will not have an anti-competitive effect. Consumers would still be hurt if
prices after the merger did not fall as far as they would have absent the merger.” Staples,
970 F. Supp. at 1092.

VIII. INJUNCTIVE RELIEF IS NECESSARY HERE

109. The Commission has satisfied its burden in this proceeding of showing likely ultimate
success on the merits. After the conclusion of an administrative proceeding, this
transaction is likely to be found to violate Section 7 of the Clayton Act.

110. The FTC has met its burden of showing that it has “raise[d] questions going to the merits
so serious, substantial, difficult, and doubtful as to make them fair ground for thorough
investigation, study, deliberation and determination by the Commission in the first
instance and ultimately by the Court of Appeals.” University Health, 938 F.2d at 1218.

111. The FTC’s showing of likelihood of success creates a presumption in favor of
preliminary injunctive relief. Heinz, 246 F.3d at 726. A full-stop injunction is presumed
to be the appropriate remedy and the defendants “face a difficult task in justifying
anything less than a full stop injunction.” PPG, 798 F.2d at 1506-07 (emphasis added).

112. The principal public equity weighing in favor of issuance of preliminary injunctive relief
is the public interest in effective enforcement of the antitrust laws. Id. citing University
Health, 938 F.2d at 1225.

113. While it is proper to consider private equities in deciding whether to enjoin a particular
transaction, the court “must” afford such private concerns “little weight, lest we
undermine section 13(b)’s purpose of protecting the public-at-large, rather than the
individual private competitors.” Heinz, 246 F.3d at 726, citing University Health, 938
F.2d at 1225 (citation omitted); cf. FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1083 (D.C.
Cir. 1981) (“Private equities do not outweigh effective enforcement of the antitrust laws.
When the Commission demonstrates a likelihood of ultimate success, a countershowing
of private equities alone would not suffice to justify denial of a preliminary injunction
barring the merger.”).

114. Consideration of private equities is especially unavailing where it can be shown that if
the merger were allowed to proceed – permitting closings of portions of the acquired
operations and making it impossible as a practical matter to undo the merger –
subsequent administrative and judicial proceedings on the merits “will not matter.”
Heinz, 246 F.3d at 726 (noting the planned closing of a manufacturing facility and certain
distribution channels as well as product relabelings).

115. The acquisition of Wild Oats by Whole Foods would eliminate the Commission’s ability
to enter full and effective relief upon completion of an administrative proceeding. Upon
consummation of the merger, Whole Foods now
operated by Wild Oats. PFF 590, 466, 471, 473, 475, 478-480, 484, 486, 489, 491, 493,
495, 497, 499, 504, 506, 509, 511. Thus,“[i]f the merger is ultimately found to violate
section 7 of the Clayton Act, it will be too late to preserve competition if no preliminary
injunction is issued.” See Heinz, 246 F.3d at 726. Therefore, the need for a preliminary
injunction to preserve the Commission’s authority under 15 U.S.C. § 45, is never
stronger than in this case. Cf. id.

116. Defendants did not offer any evidence to support a finding that Whole Foods’ acquisition
of Wild Oats could not be consummated were an injunction to issue, other than a single
unsubstantiated sentence in a footnote in their opening brief. Defendants’ Joint
Memorandum dated July 20, 2007, at 3 n.1, see Heinz, 246 F.3d at 726. Therefore, if the
Court enjoins the acquisition and it is ultimately determined that the acquisition would
not violate the antitrust laws, the advantages of the transaction can be reclaimed by a
renewed transaction. Cf. id.

117. Under section 13(b), the Court may presume that the public interest will be served by an
injunction from the Commission’s showing of a likelihood of success on the ultimate
merits. Heinz, 246 F.3d at 713-15; PPG, 798 F.2d at 1500.

118. Weighing the relevant equities and considering the FTC’s likelihood of ultimate success,
it is in the public interest that the Court enter a preliminary injunction enjoining the
acquisition pending completion of the FTC’s administrative proceeding.

Respectfully submitted,

Dated: August 15, 2007

/s/ Michael J. Bloom
JEFFREY SCHMIDT MICHAEL J. BLOOM
Director RICHARD B. DAGEN (D.C. Bar No. 388115)
THOMAS J. LANG (D.C. Bar No. 452398)
KENNETH L. GLAZER CATHARINE M. MOSCATELLI (D.C. Bar No. 418510)
Deputy Director MICHAEL A. FRANCHAK
Bureau of Competition Federal Trade Commission
Federal Trade Commission 601 New Jersey Ave., N.W.
600 Pennsylvania Ave, N.W. Washington, DC 20001
Washington, DC 20580 (202) 326-2475 (direct dial)
(202) 326-2284 (facsimile)
WILLIAM BLUMENTHAL mjbloom@ftc.gov
General Counsel
Federal Trade Commission
600 Pennsylvania Ave, N.W.
Washington, DC 20580

-21

CERTIFICATE OF SERVICE

This 15th day of August, 2007, I certify that I caused to be served a copy of the foregoing
papers on the following counsel:

Paul T. Denis, Esq.
Dechert LLP
1775 I Street
Washington, DC 20006-2401

(202) 261-3430
Paul.denis@dechert.com

Alden L. Atkins, Esq.
Vinson & Elkins
The Willard Office Building
1455 Pennsylvania Ave., N.W.
Suite 600
Washington, D.C. 20004-1008

(202) 639-6613
Aatkins@VELaw.com

Clifford H. Aronson, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036

(212) 735-3000
Caronson@Skadden.com

Attorneys for Defendants

Dated: August 15, 2007 /s/ Eric M. Sprague
Eric M. Sprague
Attorney for Plaintiff

Other useful links:

Request for Temporary Restraining Order June 06, 2007
The FTC Complaint June 27, 2007
Whole Foods Answer to Complaint
Wild Oats Answer to Complaint
Memorandum in Opposition to Protective Order

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It's All About Me

2007-08-14T14:58:00.000-05:00

Nextwave had its comments on the Notice of Proposed Rulemaking published today. Nextwave is part of the WCS Coalition and is the entity that ultimately acquired the wcs bandwidth from WCS Wireless that XM attempted to acquire without success.

Nextwave informs the Commission that it is of equal or more regulatory importance than some silly rule change:

"NextWave, a 2.3 GHz Wireless Communications Service ("WCS") licensee, wishes to underscore that it is of equal or more regulatory importance, for a greater number of FCC licensees, that the Commission devote its limited time and effort on adopting final technical ruls governing: (1) operation of SDARS terrestrial repeaters by XM and Sirius; and (2) operation of WCS systems in teh adjacent WCS spectrum."

NextWave goes on to point out that the above Notice of Proposed Rulemaking has been going on for over ten years, while the one related to the merger is only a few months old.

The members of the WCS Coalition are a snippy bunch. It's all about them.

NextWave inadvertently supports XM's and Sirius' position referring to the language preventing the control of both SDARS licenses by a single entity as "policy" as opposed to a rule. Hopefully, XM will send them a thank you note.

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NAB Suppresses Toyota

2007-08-13T17:06:00.000-05:00

As noted on Orbitcast, back on August 08, NAB included Toyota as among the groups that opposed the merger:

Today, Toyota quietly disappears from the list:

In our opinion, NAB owes Toyota an apology. Toyota has not clearly stated one way or the other whether or not it supports the merger. Toyota seems to be cautiously optimistic about it, but falls well short of endorsing or rejecting the merger.

NAB also owes Rockwell Collins, Slacker, ICO, and the Aircraft Owners and Pilots Association apologies. To our knowledge, none of these have opposed the merger. The footnotes simply say that they expressed concerns, which is true; however, most if not all simply requested that conditions be placed on the merger. That is quite a bit differ from being opposed to the merger.

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NPR Opposes Waiver and Repeal of Rule

2007-08-13T16:48:00.000-05:00

NPR had published today the strongest arguments yet against the waiver or repeal of the rule that prevents the control of both satellite radio licenses by a single entity. This will likely be XM's and Sirius' greatest challenge to retaining the rule to overcome.

NPR establishes legal precedence for interpreting the rule as binding to both the SDARS and the Commission, not simply a policy statement that XM and Sirius would have it interpreted. Further, NPR makes the point that it is not a waiver that XM and Sirius seeks, but a repeal of the rule, since it would not have any future applicability.

NPR is by no means anti-satellite radio. It makes excellent points about the success of satellite radio. It attributes much of this success--such as the quadrupling of channels-- to competition between XM and Sirius. These points are difficult to argue against.

XM and Sirius have their work cut out for them to explain this way.

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US Electronics Weighs in on the Merger

2007-08-12T19:26:00.000-05:00

Last Friday, August 10, 2007, US Electronics (USE) had its latest comments on the merger published. USE has had numerous exparte meetings with the Commission and has commented before, but this is by far the most extensive comment, totaling 93 pages, including exhibits. USE never comes out against the merger; however, it suggests that conditions be placed on the merger, notably that there should be "open network access". It doesn't want to be shut out of the market. Clearly, USE is looking after its self interest, but it also brings up several valid consumer concerns. USE makes some very important points and is at the same time very fair-minded. Although USE does not come out against the merger, they shoot down most of XM's and Sirius' arguments for the merger.

USE comments appear to be well researched and bring the unique perspective of a designer, developer, and distributor of satellite radio. USE makes a number of assertions that we have no way of verifying, such as Sirius giving sole distributor rights to Directed Electronics (DCI) and XM giving sole distributor rights to AudioVox. The conclusion is that if there is a merger, then there will be a sole distributor of satellite radios. A sole distributor, according to USE, would stifle innovation, which would harm the public interest. USE references a recent DEI presentation where DEI 'referred to itself as Sirius' "[e]xclusive retail hardware partner"' as proof of its assertion that Sirius has selected DEI as its sole distributor.

USE cites Hush-a-Phone and Carterfone as precedents for an "open access network".

USE makes the points that once merged, subsidies can be used to prevent others from entering the manufacturing business. Or, there may be no subsidies, raising the cost to consumers. Also, there will be no incentive to give subsidies to retailers in order to make the selling of satellite radios profitable, again raising the cost of hardware to consumers.

USE also notes its lawsuit against Sirius, stating that the "performance of its agreement with Sirius was interdicted by Sirius' determination to use a single supplier for its network's satellite receivers, Directed Electronics, Inc."

The meat of USE's comments is here:

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NAB Reads Orbitcast

2007-07-31T19:30:00.000-05:00

Well, it seems that NAB reads Orbitcast. Maybe that is where all the bandwidth is going. Not surprising really; Orbitcast has always been the leading source for anything satellite radio. In its latest Reply to Opposition filed by XM and Sirius, NAB immortalized a number of commenters from Orbitcast. There's Joe, Flap Jackson, PFreak, Anonymous Coward, JohnG, and Mr. FancyPants.

Here are the latest Orbitcast commenters to reach fame and glory in a NAB filing:

“Officially count me as being opposed to the merger . . . it opens up too many doors for the consumer to get screwed. They are already showing signs of being misleading when they said earlier that the prices would not be raised and that all of the current radios would work . . . both statements are true, kinda, but not really in the nature of which they were made.”
Posting by Joe to Orbitcast

“The merger doesn’t benefit the customer anymore, in fact, it will make it worse with all these new plans to keep track of. . . . NO THANKS!” Posting by Flap Jackson to Orbitcast

“Finally, as the ‘details’ begin trickling in people are starting to wake up and realize this is a bad deal for existing customers. . . . You will not be getting the best of both services, you will not be getting sports from each service, your bill is going to increase and you’re going to have to buy new equipment which I highly doubt will fill my needs immediately. . . .” Posting by PFreak to Orbitcast

“I love how it says the current price for XM and Sirius (select) is $25.90. Last time I checked you get way more channels when you subscribe to both of them for that price. It makes you think you are getting a deal but really you are only getting 10 Sirius channels and not all of them like you would if you did pay the $25.90.” Posting by Anonymous Coward to Orbitcast

“I agree with some of the previous posters regarding Mel’s smoke & mirrors. . . . The only thing an existing customer can do is keep what he has at the same price or pay more for additional stuff – unless he buys a new radio. . . . ‘A la Carte’ packages are a typical bait & switch. . . .” Posting by JohnG to Orbitcast

“These packages will make most of us spend the same or more if we want any SIRIUS/XM
Programming. I’m an XM sub[scriber] and I would like to add some of the SIRIUS rock stations. So I could either go with the A La Carte 2 of the Best of Both packages which are $14.95 or $16.95 respectively. So in the end if you want to cross over . . . then you can’t do so in any capacity without paying the same or more.” Posting by Mr. FancyPants to Orbitcast

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WSI Announces Combined Cockpit Weather and SIRIUS Satellite Radio

2007-07-29T18:20:00.001-05:00

Last Monday, WSI announced combined cockpit weather and Sirius Satellite Radio. XM no longer has a monopoly (at least for now) on satellite-based weather systems for the cockpit. Previously, only a marine package via the Sirius system was available from WSI.

Two new receivers are being offered, the AV-300 and AV-350. In addition to the weather services provided by Sirius, the AV-350 will include the Sirius audio channels. The Sirius-based weather system will obsolete the WSI InFlight AV100 and AV200 product lines. Similar as with the marine installations, WSI has extented a special transition offer to its existing InFlight customers.

Description:

WSI InFlight’s datalink service keeps pilots aware of situations as they unfold, increasing flight decision confidence. WSI InFlight delivers the most accurate, up-to-date weather and related mission critical aviation information to any aircraft equipped with the WSI InFlight antenna and receiver including the industry’s highest quality radar mosaic, WSI NOWrad®, Radar Summary with storm cell height, speed of movement and direction, lighting data from the long range United States Precision Lightning Network (USPLN), cloud tops and Canadian radar. WSI’s aviation weather content also delivers icing levels, surface analyses, winds and temperatures aloft, graphical and textual METARs,TAFs, SIGMETs, AIRMETs, TFRs, PIREPs and city forecasts directly to the cockpit. The AV-350 receivers can optionally add more than 130 channels of SIRIUS sports, news, talk and commercial-free music programming to an aircraft audio system, selected wirelessly via a remote control.

Units are expected to start shipping next month. The MSRP for the AV-300 receiver and antenna is $4,347, plus installation; the MSRP for the AV-350 $5,949 plus installation. The Weather data service starts at $29.99 a month.

To order your receiver now, see the Authorized Dealers here. Okay, maybe not. Check back; they may eventually get the link working.

WSI INFLIGHT SIRIUS TRANSITION FREQUENTLY ASKED QUESTIONS

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Technical Highlights of the XM/Sirius Opposition

2007-07-25T16:48:00.001-05:00

XM/Sirius presented some interesting ideas that they hope will allow them to expand the number of channels, such that a subscriber for one service can receive the "best of" the other service. It was an interesting discussion on how the two encode their respective signals, the differences, and how these differences can be combined to create an even more efficient coding algorithm. The purpose of these Exhibits are to dispute the study by NAB that indicated that it could not be done.

There were to Exhibits: one on behalf of Sirius:

A Technical Report Regarding Coding Efficiency and the Sirius-XM Merger

Prepared by Dr. Deepen Sinha, ATC Labs

July 24, 2007

and one on behalf of XM:

Neural Audio Corporation

Report Regarding Certain Technical Aspects Of the XM-Sirius Merger

July 24, 2007

The Sirius exhibit is worth the read if you have the opportunity. The XM exhibit is not all that enlightening, nor does it really explain how channels will be added, other than the continued evolution of the various techniques. It did little to refute the NAB report, other than to point out a few errors of marginal significance.

Highlights

* CODEC efficiencies have evolved over time and will continue to do so

* ~~Sirus has increased its efficiency by approximately 40% since 2002~~

* Sirius and XM technologies have progress through different technologies

* Sirius has focused on Psychoacoustic Modeling and statistical multiplexing, while XM has focused on optimizing the pre-processor configuration

* Combining the above "like would yield improved efficiency on both the systems"

* Sirus uses the PAC audio compression scheme (no mention of AAC or AAC+)

* XM uses AAC+

* Appling "an Enhanced Psychoacoustic Model (EPM) developed for Sirius and used in PAC" to the AAC CODEC (not AAC+) can improve its efficiency. On average, there was "a bit demand reduction" of about 8.5% without optimization when tested at 51 kps)

* XM is believe to have installed "hooks" in its firmware to implement statistical multiplexing

* "Statistical multiplexing operates by encoding multiple channels instead of a single channel such that channel capacity can be adaptively steered from one channel to the other. This improves channel utilization by allowing the bandwidth to be divided based on need."

* Statistical Multiplexing can increase efficiency by 30 to 40% in video broadcasting (oddly, the exhibit does not give statistics for audio)

* Efficiencies should allow an increase of 7 music channels and 4 voice channels (assuming an average bit rate of 40 kbps for music channels and 16 kbps for voice.

* HD Radio can't benefit for statistical multiplexing

* For XM, Neural Codec Load Analysis System (N-CLAS) is applied before encoding

* Channels can be added based on seasonal substitution

Our Thoughts

We notice that the EPM was applied to the AAC CODEC and not AAC+, which XM apparently uses. Also, it seems to be trying to accomplish the same results as the neural processing, but it a different way. Both seem to try to take advantage of how the human ear perceives sounds. It is questionable whether it would yield any more efficiencies if applied to the XM stream after the neutral processing. We don't know how it would react with the AAC+ CODEC combined with Spectral Band Replication (SBR).

Statistical Multiplexing would seem to hold great promise. Whether or not it can be combined with XM's other techniques is a big question. If XM indeed has "hooks" in its code, it may well have planned on this possibility. Let's hope so. It wouldn't surprise us to find out that its current technique only works on static bit rates. If so, it could be a significant development cycle.

I have first hand experience with "hooks". They can be useful, but one rarely anticipates everything that is needed. They are usually secondary and often don't evolve with the rest of the code. I was recently project manager for a development project in which we developed our application around vendor code that left "hooks" in its code for its customers to customize the application. How did that work out? Not too good. It turned out to be a fairly major development with the vendor making significant changes to these "hooks" to make them work. We discovered numerous errors it the code using these "hooks". I would venture that 50% or more of the "hooks" had some sort of problem. And this was for a worldwide distributor of equipment.

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Sirius Files for Experimental License to Test Repeaters

2007-07-24T17:53:00.000-05:00

On Monday, Sirius filed for an experimental license "to carry out experiments with new models of satellite digital audio radio services (“SDARS”) terrestrial repeater equipment." "Recently, Sirius has been updating its repeater/antenna design and technology." Rather than test them on site, Sirius would like to set up a test site to test the repeaters before deployment. It intends to test repeaters at or below 2,000 Watt EIRP average, the power level for which the FCC has given recent approval. Power levels above 2,000 Watt have been vigorously opposed by the WCS Coalition. The area Sirius has chosen is Las Vegas, where conveniently it has not been able to get approved to operate a replacement repeater operating above 2,000 Watt. Sirius plans to test up to 10 "relatively low power repeaters" at this site. The area will be an 80 kilometer radius around Las Vegas.

Update: Application dismissed without prejudice on October 17, 2007, because Sirius failed to provide the AFTRCC coordination paperwork requested by the commission on September 13, 2007. Sirius' top engineer, Terry Smith, did reply to the request on October 15; it was either inadequate or too little, too late.

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Sirius/ICO/TMI Connection

2007-07-22T15:35:00.000-05:00

This is a followup to the followup on ICO, the company that filed comments in the XM/Sirius merger proceedings indicating that it might be in position to compete for dash space with satellite radio.

There is a Sirius connection that goes back to 2005, when the FCC was trying to determine what to do with 24 MHz of bandwidth in the MSS spectrum when 3 licensees surrendered their authorization to use it. On July 13, Sirius urged the FCC not to give this recently freed up spectrum to ICO and TMI--the only remaining licensees for MSS-- and to consider alternatives.

Later, on July 29, 2005, Sirius proposed itself as the beneficiary, encouraging the FCC to give nothing to ICO and TMI and to give all 24 MHz to satellite radio and in particular to give it all to Sirius, because it was out of bandwidth to expand its service. Naturally, this generous proposal was not well received by others attempting to gain access to additional spectrum. Sirius reiterated its stance in its reply to comments.

This time frame coincided with the time XM was attempting to acquire additional spectrum in the wcs band from WCS Wireless.

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Sirius Hocks Trademarks

2007-07-20T17:16:00.000-05:00

Sirius recently hocked some of its more famous trademarks to Morgan Stanley Senior Funding. Sirius apparently had to put these up as collateral for the recent borrowing. Trademark applications include: Stilleto, SIR, Sirius Internet Radio, Sir Sirius Internet Radio, The Best Radio on Radio, Stratus, and Speedster.

Update 07/23/2007: Sirius has also hocked all its patents and patent applications, except one for interoperable radios. XM does this too with its patents and patent applications. The trademarks seem to be a bit trivial.

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Sirius Files Application to Operate Repeaters at the Great American Trucking Show and the CEDIA EXPO 2007

2007-07-19T20:13:00.000-05:00

In one of two applications filed today, Sirius requested authority to operate 200 Watt repeaters at the Great American Trucking Show (August 23-25, 2007) at the Dallas Convention Center and the CEDIA EXPO 2007 (September 3-9, 2007) at the Colorado Convention Center. Sirius will carry out equipment and service demonstrations at these trade shows.

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Sirius Files Application to Operate 5 Low Powered Repeaters

2007-07-19T19:43:00.000-05:00

Today, Sirius filed for special temporary authority (STA) to operate 5 new low-powered repeaters. Repeaters will be located in the following locations:

Cincinnati (84-23-19.0, 39-13-10.0)
St. Louis (90-31-53.4, 38-45-10.2)
(2) Houston (95-31-02.70, 30-00-35.60), (95-25-35.4, 30-07-18.6)
Miami (80-26-25.9, 25-33-44.5)

All repeaters are operated at 2,000 Watt EiRP.

Sirius made one interesting note in its filing that is likely to haunt it:

Sirius does not anticipate any in-band or out of band interference from these repeaters. As noted above, these low-power repeaters will operate at or below a power level that has been deemed presumptively acceptable by both the Commission and WCS licensees. In addition, WCS licensees will have an opportunity to comment on the STA during the public notice period; as a result, Sirius has not notified the WCS licensees in the affected MSAs prior to filing this request. Therefore, Sirius respectfully requests that the Commission promptly grant its proposed modifications to its STA.

Earlier, Sirius noted:

Indeed, WCS licensees have deemed the installation of repeaters at or below 2000 Watt threshold unobjectionable.3

Footnote 3 explains:

See, e.g., Petition to Dismiss or Deny of BellSouth Mobile Data, Inc. and BellSouth Wireless Cable, Inc., File No. SAT-STA-20060623-00067 (filed September 18, 2006) at 6 (“BellSouth believes that terrestrial repeaters operating below 2 kW peak EIRP will not cause undue interference to its WCS operations”).

"Peak" is the key word. No doubt, Sirius is talking about average. It is almost as though Sirius is trying to antagonized the WCS Coalition. We suspect we will see a response.

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Sirius Responds to Primosphere's Motion to Consolidate

2007-07-19T17:50:00.000-05:00

Yesterday, Sirius responded to Primosphere's motion to consolidate an old application into the current application of XM and Sirius to merge in a bid to claim a slice of the satellite radio bandwidth.

Primosphere lost its case in the DC Court of Appeals and withdrew its Application for Review from the FCC. The Commission never officially accepted; therefore, Primosphere feels that it is still valid.

Sirius, on the other hand, rightly feels that when Primosphere withdrew its application, that was the end of it. As Sirius so poetically put it, "There is no way for Primosphere to un-ring this bell three years later."

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A Delphi Patent Application to Satisfy the RIAA?

2007-07-19T16:50:00.000-05:00

Delphi had a patent application disclosed today for a satellite radio receiver that records information into a satellite radio receiver from the satellites or from the internet that can include the functionality of a PDA and an MP3 player and is encrypted with a local key. The local key prevents the sharing of content with other users. The content can only be played back a limited number of times. These feature are implemented to placate the recording industry.

Hopefully, this will satisfy the needs of the recording industry, and satellite radio, XM in particular, can move on with radios that enhance the audio experience for subscribers.

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XM Requests Repeater for Sturgis Bike Rally

2007-07-16T14:16:00.000-05:00

It's one of those Monday's for XM. It submitted a 30 day application to operate a very low powered repeater at the Sturgis Bike Rally in Rapid City, South Dakota, from August 6-12, 2007. XM had to withdraw the application and resubmit it again. Apparently, the original application had errors.

The application is for one 0.5 Watt average EIRP repeater for operation at the Rushmore Civic Center. In this case, a mini repeater located in the Civic Center containing the same receiver, transcoder, and upconverter of a terrestial repeater will receive the XM signal from the east coast satellite. It will transmit the signal via coax directly to a very low powered repeaters, where the signal will be amplified and re-transmitted.

We don't recall XM being there before at the bike rally. Perhaps this is a new venture for XM.

To find out more about the Sturgis Bike rally, check out this site: sturgiszone.com

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Followup on New ICO

2007-07-15T19:16:00.001-05:00

SiriusBuzz covered the FCC filing of New ICO in the XM/Sirius merger comments that seemed to indicate that ICO might be competition to satellite radio. We have taken an initial look into ICO to see what they are about.

In 2001, the International Bureau of the FCC authorized eight entities for mobile satellite services: "The Boeing Company; Celsat America, Inc.; Constellation Communications Holdings, Inc.; Globalstar, L.P.; ICO Services Ltd.; Iridium LLC; Mobile Communications Holding, Inc.; and TMI Communications and Company, Limited Partnership." Each was authorized to operate in an equal, 3.5 megahertz segment of spectrum in each of the 1990-2025 MHz and 2165-2200 MHz bands. Two of the entities were foreign: ICO Services (UK) and TMI Communications (Canada). The later two are the only remaining entities for MSS.

ICO Services has gone through bankruptcy and reorganization. TMI Communications is now controlled by TerreStar, which is majority owned by Motient of XM fame and has ties to Mobile Satellite Ventures (where Gary Parsons is Chairman of the Board) and SkyTerra.

In 2005, after the others surrendered their authorization for bandwidth, both ICO and TMI were assign 20 MHz of bandwidth: 10 MHz for upload; 10 MHz for download.

ICO originally intended to implement a complex constellation of 12 non-geostationary satellites and planned to compete with Iridium and Globalstar. Its first satellite blew up on the launch vehicle. Its second satellite was successfully launched in June, 2001, meeting an important deadline for having launched two Boeing satellites. It came down to the meaning of the word "launch". After that, ICO scaled back its system to one Loral geostationary satellite and terrestrial repeaters. ICO was supposed to have this satellite in operation this month, but recently received authority to delay the launch to December of this year. The satellite will initially provide ubiquitous coverage to all 50 states, with capability of providing coverage outside the US. Its MSS/ATC systems "is being designed to provide wireless voice, data, video, and/or Internet service throughout the United States on mobile and portable devices." It has a November launch slot. Here is a description of its planned infrastructure:

Our MSS/ATC System infrastructure is expected to include the following:

One orbiting GEO satellite, which will utilize a "bent pipe" architecture, where the satellite "reflects" the signals between the end-user equipment and the gateway ground station.
Ground-based beam forming ("GBBF") equipment that is expected to be located at the gateway ground station.
A land-based transmitting/receiving station utilizing large gateway feederlink antennas, with the gateway ground station connecting to our network through high-speed interconnection links and providing the interface between the satellite and the network.
A core switching/routing segment, consisting of equipment used to route voice, video, and data traffic between our network and the public data, telephone, Internet and mobile network, and integrated with the satellite and ATC segments.
An ATC terrestrial network that will provide terrestrial wireless communications services that will be fully integrated with the satellite segment to provide ubiquitous national coverage to end users.
End-user equipment capable of supporting satellite-only and dual-mode (satellite/terrestrial) services.

It appears that Sirius COULD have competition for its backseat video and could provide competition to both XM and Sirius for data services. Its biggest advantage is that it is a two way service.

TMI, now TerreStar, plans one Loral geostationary satellite employing hundreds of spot beams covering the US (including Hawaii and Alaska) and Canada. Terrestar recently ran into a delay in the delivery of the satellite. It hopes to take delivery next year. It plans to provide 4G cellular services.

MSS have had a troubled past. Be careful with this one.

Other information:
2006 ICO Investor Presentation
August 10, 2006 FCC Filing (good back ground info)
ICO Report

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Sea Launch Neglects to have Licences Transferred

2007-07-12T16:17:00.000-05:00

Opps! Seems that when Sea Launch was re-incorporated on January 1, 2004 as a Delaware Limited Liability Company under the name Sea Launch Company, L.L.C., it neglected to request that the licenses be transferred. Now that the error has been discovered, Sea Launch has asked the FCC to transfer the license as though the mistake never occurred. In order to ensure that that doesn't happen again, it has made arrangements with its "largest equity holder, Boeing, to assist in the management of its FCC license resources. Boeing’s Frequency Management Services (“FMS”) includes a large professional staff of RF engineers and administrators, who are extensively trained in the FCC’s regulatory and procedural requirements."

XM and Sirius know well the woes of startup companies in navigating the government bureaucracy. The two made mistakes in how the repeater networks were managed. We say that Sea Launch deserved some measure of forgiveness.

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Another Satellite Radio Provider?

2007-07-11T13:41:00.000-05:00

As a few of you may recall, Primosphere was one of the four original bidders for a satellite radio license. It is still one of four permitted to hold a satellite radio license. Ultimately, the Commission narrowed the number of licenses available. Primosphere's application to launch and operate satellites for satellite radio service was dismissed. In December 2001, Primosphere requested a Application for Review of the dismissal. Finally, in April 2004, Primosphere submitted a motion to withdraw the Application for Review. Well, it seems that the FCC never got around to acting on this motion; therefore, the motion remains active, according to Primosphere.

Primosphere has now withdrawn it motion to withdraw the Application to Review. As a direct result of the proposed merger of XM and Sirius, Primosphere, on July 03, 2007, submitted a Motion to Consolidate the application of XM and Sirius with its application to launch and operate satellites for satellite radio service.

That's interesting enough, but consider that there are only two bands approved for satellite radio. On March 19, 2007, Primosphere submitted a Supplement to its Application for Review, where it asked for a portion of the bandwidth granted to XM and Sirius (and use of the combined company's satellites) in the event the merger is approved. This way, they could begin service almost immediately, providing competition to the merged entity.

On April 23, 2007, Sirius submitted a Motion to Strike, saying that Primosphere's motion to withdraw was effective immediately. On May 08, Primosphere countered with its Opposition to the Motion to Strike, countering the arguments made by Sirius.

On May 18, both XM and Sirius filed a reply to the Opposition to the Motion to Strike, again saying that Primosphere's original withdrawal was final. They also asked the Commission to strike the Supplement to the Application for Review as fatally defective.

We can't say who is correct, but Primosphere seems to be trying to exploit a legal technicality. On the other hand, XM's and Sirius' claim that once a withdrawal has been made, it is over may not be correct either. For example, XM withdrew its application to operate very low powered repeaters once the application became moot (SAT-STA-20070508-00067 STA). The Commission later issued a public notice acknowledging the withdrawal, offically accepting it.

This may be all XM and Sirius need to see their wish granted. Be careful what you ask for.

Update July 13, 2007: It seems that Primosphere has filed multiple Applications for Review. The International Bureau records only go back to the latest one. The FCC formally denied Primosphere's first Application for review. The Commission was very explicit on that one:

On November 30, 2001, the Commission denied both of Primosphere’s applications for review and reaffirmed the October, 1997 Bureau Orders granting CD Radio and AMRC’s applications for the two available SDARS licenses. Therefore, Primosphere’s application is moot.

Primosphere filed another Application for Review when Motient transferred the satellite radio licenses in 2000. Below is a history from a SEC filing:

CHALLENGE TO XM SATELLITE RADIO'S LICENSE.                             

In June 1997, Primosphere, one of the two losing bidders in the
Digital Audio Radio Service (DARS) auction, filed a Petition to Deny the       
application of XM Satellite Radio Holdings Inc. and subsidiaries (the          
"Company") for an FCC license. Primosphere alleges that an entity,             
WorldSpace, had effectively taken control of the Company without FCC approval  
and that WorldSpace has circumvented the FCC's application cut-off             
procedures. (WorldSpace is no longer a stockholder in the Company.)            

      The FCC issued a decision denying Primosphere's petition. Primosphere
filed an Application for Review of this decision, but the FCC has not acted on 
the Application for Review, which has been pending since November 1997. The    
FCC's order granting the Company its license remains in effect during the      
pendency of this Application for Review. In March 2001, Primosphere asked a    
federal court of appeals to mandate that the FCC act on its Application for    
Review.                                                                        

In December 2000, the FCC approved a transfer of control of the
Company's FCC license from Motient Corporation to a diffuse group of owners,   
none of whom has a controlling interest in the Company. Primosphere objected to
the transfer, and the FCC has conditioned its approval on the ultimate outcome 
of Primosphere's Application for Review, but declined to act on the Application.

       The Company believes that the award of its license will continue to be
upheld. The Company of course cannot guarantee the ultimate outcome of this    
challenge. If this challenge is successful, the FCC could in its discretion take
a range of actions, which could harm the ability of the Company to continue its
satellite radio service.

The above predates the earliest Application for Review on record with the International Bureau. The text of this application has not be located. Apparently, the latest Application of Review was yet another one. Enough's enough.

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Merger Comments on Satellite-based Weather Systems

2007-07-10T17:52:00.000-05:00

There were a couple of interesting comments posted today concerning the merger of XM and Sirius and the satellite-based weather systems (SBWS). This is an often forgotten part of the satellite radio business. Most people think about the music when they think about satellite radio, but it is much more than that. XM and Sirius to a lesser extent are the only two commercial providers of SBWS. If the two combine into a single entity, it will be a monopoly.

One filing was by Rockwell Collins. It rightly points out that in the SBWS market, the combination of XM and Sirius will be a merger from duopoly to a monopoly. However, Rockwell Collins never takes a position on the merger. Rather, it suggests that the Commission impose two conditions.: 1) that both services be maintained and that prices remain relatively unchanged; and, 2) no customer discrimination.

Rockwell Collins believes that competition in the SBWS market will keep prices down and thus promotes safety in the skies. A monopoly might raise prices making the units less affordable. Some pilots might dispense with SBWS. The second point comes about because Rockwell Collins feels that it has be locked out by exclusive agreements between XM and Garmin and Heads Up Technologies such that the playing field is not level. Rockwell Collins does make a SBWS, the Pro Line 21; however, XM has refused to enter into a direct licensing agreement with Rockwell. Rockwell Collins would like to develop and market SBWS. It seems grateful that there is an alternative in Sirius.

The second filing was by the Aircraft Owners and Pilot Association (AOPA), representing 412,000 members. Like Rockwell Collins, the AOPA takes no position on the merger. However, they would like the Commission to apply conditions. The organization insists that SBWS remain a part of satellite radio post merger. It wants the same assurances as the audio portion of satellite radio: the current subscription prices must be maintained and the equipment must not be made obsolete by the merger.

Garmin also commented back in April. It fears that XM and Sirius might settle on a different format, costing them millions of dollars. Garmin was insistent that the XM system be maintained in its present form. It was not concerned with competition and seemed to care less about Sirius. One can read the comments here.

This often forgotten service could very well derail the merger on the outside chance that it otherwise passes muster with the DOJ and FCC.

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WCS Coalition Proposes Compromises to Coexist with Satellite Radio

2007-07-10T15:19:00.000-05:00

Yesterday, the WCS Coalition filed a proposal that would allow the WCS licensees and satellite radio to coexist. This is a significant departure from their scorched earth policies of no compromise of the past. It is a breakthrough. The Coalition seems to be making a sincere efforts this impasse.

Of course, there is something in there for them. The Coalition wants higher out of band emission limits to make their service more practical. The Coalitions makes the point that the Commission imposed the present limits based on the worst scenario for WCS implementation. Today, the WCS licenses belong to a handful of companies that intend to implement WiMax. The strict limits, they argue, are not applicable. The higher out of band emission limits could results in interfere to satellite radios.

As a compromise, they have agreed to accept repeaters operating at 2,000 Watt or less AVERAGE EIRP. In the past, the Coalition has insisted on PEAK. It is really a moot issue as the FCC has recently approved repeaters based on average power, deferring the final decision. The Coalition had already seemed to have lost this issue, but this would make it official.

However, the Coalition steadfastly refuses to accept the "grandfathering" of the the existing, higher powered repeaters.

With the two sides seemingly willing to talk to each other, the a resolution of the repeater issues may be at hand.

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Satellite Weather: Sirius Battles XM

2007-07-08T14:32:00.000-05:00

The May issue of Powerboat Reports featured a comparison between Sirius' and XM's marine weather packages. They compared such items as features, update speed, costs, user interface, and data presentation.

The winner won based on the quality of the data and ease of use. One was much less expensive and all inclusive; the other, relatively expensive, requiring the top of the line package for the discriminating boater. The winner? Read the article.

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Asian American Justice Center Comes Out Against the Merger

2007-07-06T15:39:00.000-05:00

The Asian American Justice Center (AAJC) today came out against the merger. They are one of very few non-NAB related groups to oppose the merger.

The AAJC opposes the merger on the following grounds:

* Would create a monopoly and a single gatekeeper
* A merger would decrease chances of minority related programming
* Detrimental impact on terrestrial radio
* Likelihood of price increases

The AAJC believes that XM and Sirius have made little effort to date to serve the Asian community and the combined entity would be even less inclined to do so.

They made the point the combined company cannot add channels, only swap one channel for another. They believe there is little opportunity for Asian specific programming to be added.

The AAJC makes some good points. XM and Sirius have been mis-leading, in our opinion, about the addition of channels and programming. The only way they will increase diversity is by giving up something else. As profit maximizing firms, one would have to conclude that the programming diversity in place today is to attract the maximum number of listeners and to produce the maximum ad revenue. We see no incentive for satellite to change this formula, unless it increases their profits. A merger doesn't make programming diversity any more attractive.

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Update on the Adjustment of Rates and Terms for Preexisting Subscription and Satellite Digital Audio Radio Services

2007-07-02T14:06:00.000-05:00

Below is an update on the hearing for the adjustment of rates and terms for satellite radio as taken from the Copyright Royalty Board website:

Hearing Information

The trial to determine the reasonable rates and terms for preexisting subscription services and satellite digital audio radio services began on Monday, June 4, 2007. The Services (XM Satellite Radio and Sirius Satellite Radio) and SoundExchange presented their direct cases from June 4 through June 28, 2007. Music Choice and SoundExchange reached an agreement and therefore no further proceedings are necessary for them.

There is now a break in the trial while the parties prepare their rebuttal cases. However, Dr. Michael Pelcovits, a witness for SoundExchange, was unavailable the week of June 25; consequently, his testimony will take place on Monday, July 9, 2007, starting at 9:30 a.m. in Room LM-408 in the James Madison Memorial Building of the Library of Congress, 101 Independence Avenue, S.E., Washington, D.C.

Rebuttal hearings are scheduled to take place August 15 through August 30. More detailed information will be posted closer to the start of the rebuttal hearings.

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Sirius Receives Authority to Operate 15 Low Powered Repeaters

2007-06-29T22:54:00.000-05:00

Finally, there has been some movement on the repeaters. On Friday, Sirius received grant of authority to operate 15 new, low powered repeaters.

The repeaters are all 2,000 Watt EIRP. The repeaters include 5 in Atlanta; 2 in Chicago; 1 in Cleveland; 1 in Detroit; 1 in Kansas City;' 1 in New York; 1 in Orlando; 1 in Phoenix; and 2 in Tampa.

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National Council of Women's Organizations Lends Support to Merger

2007-06-21T13:15:00.000-05:00

Yet another organization has given its support to the XM-Sirius merger. Today, the National Council of Women's Organizations, representing 11 million Amercian women, gave its enthusiastic support.

It seems that almost all of the non-NAB supported groups are endorsing the merger. This should play well with the FCC. And congress should pay attention to the force behind satellite radio. Having said that, we still believe that this merger has little chance of passing.

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Sirius Antenna Diversity Patent Application

2007-06-21T10:47:00.000-05:00

United States Patent Application 20070142009
Kind Code A1

Scarpa; Carl ; et al.

June 21, 2007

Systems and methods for antenna diversity combining for satellite radio signals

Abstract
Systems and methods are presented for digital antenna diversity combining. In exemplary embodiments of the present invention, at least two antenna signal paths can be communicably connected to a receiver. Each antenna signal path can be provided with an RF tuner communicably connected to a demodulator, which can estimate the signal to noise ratio (SNR) and time of arrival of its respective antenna signal. In exemplary embodiments of the present invention, a time alignment circuit can be communicably connected to each antenna signal path, and a maximum ratio combiner can be communicably connected to the time alignment circuit. In operation, the time alignment circuit can use the time of arrival estimate to align the multiple signals and the maximum ratio combiner can use the SNR estimate obtained for each antenna signal to respectively weight each signal and thereby generate a combined output signal. In exemplary embodiments of the present invention, a switch diversity combiner can be further provided, and can quickly detect when an antenna signal is entering a fade, allowing the maximum ratio combiner to set that signal's weight to zero. In exemplary embodiments of the present invention, a digital diversity combiner can be provided in a stand alone integrated circuit, or can be integrated in a larger integrated circuit, such as, for example, a satellite radio overlay processor.

Inventors:
Scarpa; Carl; (Plainsboro, NJ) ; Sazzad; Sharif; (Ewing, NJ) ; Strolle; Christopher; (Fort Washington, PA)

Correspondence Name and Address:
KRAMER LEVIN NAFTALIS & FRANKEL LLP;INTELLECTUAL PROPERTY DEPARTMENT
1177 AVENUE OF THE AMERICAS
NEW YORK
NY
10036
US

Assignee Name and Adress:
Sirius Satellite Radio, Inc.New yorkNY
Serial No.: 607383
Series Code: 11
Filed: December 1, 2006
U.S. Current Class:455/132; 455/272
U.S. Class at Publication:455/132; 455/272
Intern'l Class: H04B 7/08 20060101 H04B007/08; H04B 1/06 20060101 H04B001/06

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Semi OT: Honda Experimental License

2007-06-13T18:09:00.000-05:00

This Honda application popped up yesterday. It is no big deal, really, but we find it interesting the process that certain OEMs go through to improve their product. In this application Honda is evaluating the affect of body design on receiving antennae. Satellite radio is among those tested.

The following frequencies will be tested:

FM (87.7 – 107.9 MHz)
TV (55.25 – 83.25 MHz, 175.25 – 885.25 MHz)
AMPS (806 – 902 MHz)
PCS (1850 – 1990 MHz)
SDARS (2320 – 2345 MHz)

Testing will take place in the Honda R& D facility in Ohio.

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Sirius Granted Authority to Operate 5 Signal Boosters

2007-06-12T19:20:00.000-05:00

Sirius was granted authority today for the application described below:

"Sirius Satellite Radio Inc. requests Special Temporary Authority to operate five signal boosters at its National Sales Meeting in Plainsboro, NJ from June 17-20, 2007."

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XM XpressR

2007-06-11T21:20:00.000-05:00

Details are also out on the XM XpressR. This is a sister radio to the Audiovox XpressEZ. Both are made by Audiovox, but only the XpressR is registered under XM. The user guide is here. One can see photos of it here. To see what it under the hood, see these photos.

The release is drawing near.

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Audiovox XpressEZ

2007-06-11T21:12:00.000-05:00

Details are out on the new Audiovox XM XpressEZ radio, apparently known internally as project Bullwinkle. One can download the manual here. Most of you have probably seen the photos on Orbitcast, but if not, here are more photos. And, finally, for those that want to see what's under the hood, you can find those photos here.

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XM Takes Measures to Mitigate Service Outages

2007-06-10T13:22:00.000-05:00

Last Friday, XM filed for an immediate 60 day Special Temporary Authority (STA) to drift XM2 to the 85.2 orbital location near XM3. The measure is to mitigate any service outage such as XM experienced on Monday, May 21.

XM uses the east coast satellite XM3 to feed its repeater network. On Monday, May 21, things went awry and XM3 was temporarily out of service. Not only was the satellite signal lost, but the repeater network went down, because XM3 is used to feed the repeaters.

As you may recall, XM had to replace the original satellites, XM1 and XM2, affectionately known as Roll and Rock, because their solar panels began to fail prematurely. XM 3 and XM4 are now fully operational. XM3 is orbital location 85.1. XM4 is at 115. The crippled satellites, XM1 and XM2, are presently at 115.1 degrees, near XM4.

XM intends to use XM1 and XM2 to replace XM3 in the event of a failure. Therefore, XM 1 and XM2 both eventually will be drifted to the 85.2 degree orbital location. XM already has an STA to drift XM1.

The original plan was to have XM1 andXM3 together and XM2 and XM4 together, such that XM3 and XM4 would each have a backup. They apparently decided it was better to have XM1 and XM2 together, such that they could fully replace XM3 in the event of a failure. XM3, as they found out, is much more critical.

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