Radio waves beamed from space

There's a revolution gaining momentum in the United States, one going over the heads of most people.

As they drive the sweeping interstate highways or walk to work, people are tuning into digital radio stations that are beamed from satellites in space rather than local radio towers.

The two US satellite radio providers, XM Radio and Sirius, now have 9.3 million subscribers between them. Those subscribers pay around US$12 ($17.50) a month to receive hundreds of channels of music, entertainment, news, sports and weather reports. The big lure is commercial-free listening and access to the same radio stations across North America.

As satellite radio gains traction, big-name entertainers such as Howard Stern, Bob Dylan and Tom Petty are hosting shows exclusive to satellite subscribers. It's a move that's ruffling the feathers of traditional radio broadcasters.

"They do see us as a threat and actively try to take action and publicity to try and negate our positive effect on the market," said Jim Collins, Sirius vice-president for corporate communications.

The majority of Sirius' customers are males aged 18 to 54 but content is being added to appeal to women. Domestic diva and convicted fraudster Martha Stewart now has her own show on Sirius.

The Sirius and XM satellite radio stations are delivered from a network of dedicated satellites positioned over North America and, being subscription-based, have a different business model to the radio broadcasters.

"No terrestrial radio station can provide the 125 channels of programming that we offer, including the 68 channels of commercial-free music," said Collins. "It's apples and oranges."

The hype at the Consumer Electronics Show held in Las Vegas this month was around satellite radio receivers from the likes of Samsung that double as mp3 players. XM expects to have nine million subscribers by the end of the year, and 20 million by 2010. That's a lot of satellite-enabled car stereos, mp3 players and home theatre systems, and consumer electronics makers have moved quickly to exploit the advantages of satellite.

"Current terrestrial technology is limited to its perimeter as well as bandwidth," said Jaed Arzadon, a spokesman for car stereo and mp3 player maker Pioneer.

"New technologies such as traffic information are key to the growth of Pioneer's navigation business and the industry as a whole."

Location-based services and traffic updates could also be co-ordinated via satellite radio, which is delivered at lower frequencies than satellite TV broadcasts.

Collins said most Sirius subscribers were buying "after-market" satellite receivers for their cars - or picking them up after they bought the vehicle, as opposed to getting them built in. The receivers can sell for as little as US$50 and can also be plugged into a home stereo.

"At some point, we believe that the bulk of our subscribers will come directly from the automotive market rather than retail," he said.

Auto makers such as General Motors, Hyundai, Mercedes, Nissan and Toyota are all putting digital satellite receivers into cars for the North American market.

Both Sirius and XM operate in Canada, which can be covered by existing satellites, but repeating the formula further afield is a big undertaking. "In order to expand anywhere overseas other than Mexico, both companies would need additional satellites and repeaters, as well licences to operate from foreign governments," Collins said.

International expansion has not been ruled out but it would be expensive. Cost is the main factor in preventing digital satellite radio from taking off in New Zealand, where the radio airwaves are still ruled region to region despite broadcast syndication by the biggest stations.

Sky TV re-broadcasts a number of the networks' radio channels to its satellite digital customers, but none of its own radio content. That's unlikely to change.

Sky spokesman Tony O'Brien said the Optus satellites that provided coverage to Sky subscribers were not geared up to broadcast digital satellite radio and modifications to accommodate such a service would be hugely expensive.

"Optus has L-band frequencies that cover a huge area and are used by the Australians for land-based mobile," he said.

"But the frequencies for the C1 and B1 satellites [used primarily for pay TV transmission] for New Zealand don't work well for satellite radio."

With plans to put a satellite in orbit above New Zealand at a cost of up to $240 million, fledgling satellite player Nzlsat will be able to provide broadband and broadcasting services nationwide, but a satellite radio service is unlikely.

"It's not on the cards at this stage," said Nzlsat director Paul Hannah-Jones.

"We've got a business model based on commercial and technical goals. Satellite radio isn't among them."

A cheaper and more likely option for New Zealand is terrestrial digital audio broadcasting, which is used across Europe to transmit more radio signals at higher quality.