Sirius XM Radio (SIRI)

Internet Radio

Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world. Major media companies including Clear Channel, CBS, America Online and Yahoo! make near CD-quality digital streams available through the Internet for free or, in some cases, for a fraction of the cost of a satellite radio subscription. In addition, an Internet based radio product was recently announced for vehicles. The past few years have seen a steady increase in the audio quality of Internet radio streams and in the amount of audio content available via the Web, resulting in a steady increase in Internet radio audience metrics. We expect that improvements from higher bandwidths, faster modems and wider programming selection are likely to continue making Internet radio an increasingly significant competitor in the near future. These services already compete directly with SIRIUS’ and XM’s Internet offerings and, through the use of home stereo media adapters or media-centric PCs, with the companies’ home line of products.

Internet Radio

SIZE="2">Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world. Major media companies including Clear Channel, CBS, America Online and Yahoo! make near
CD-quality digital streams available through the Internet for free or, in some cases, for a fraction of the cost of a satellite radio subscription. In addition, an Internet based radio product was recently announced for vehicles. The past few years
have seen a steady increase in the audio quality of Internet radio streams and in the amount of audio content available via the Web, resulting in a steady increase in Internet radio audience metrics. We expect that improvements from higher
bandwidths, faster modems and wider programming selection are likely to continue making Internet radio an increasingly significant competitor in the near future. These services already compete directly with SIRIUS’ and XM’s Internet
offerings and, through the use of home stereo media adapters or media-centric PCs, with the companies’ home line of products.

SIZE="2">Downloading Devices

The Apple iPodFACE="Times New Roman" SIZE="1">^® is a portable digital music player that allows users to download and purchase music through Apple’s iTunes^® Music Store, as well
as convert music on compact disc to digital files. Apple has sold over 170 million iPods^®. iPods^® are compatible with
certain car stereos and various home speaker systems, and certain automakers have entered into arrangements with manufacturers of portable media players that are expected to enhance this compatibility. Availability of music in the public MP3 audio
standard has been growing in recent years with sound files available on the websites of online music retailers, artists and record labels and through numerous file sharing software programs. These MP3 files can be played instantly, burned to a
compact disc or stored in various portable players available to consumers. Internet-based audio formats are becoming increasingly competitive as quality improves and costs are reduced.

SIZE="1"> 

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Table of Contents

          3.           Internet Radio

          Many consumers are not waiting for the prevalence of HD Radio to find digital-quality sound for their audio entertainment. Increasingly, consumers are turning to Internet radio, which requires a device, such as a personal computer, connected to the Internet.⁷⁶ In one survey, 34.5

^{____________________________
71}           Bunzel Media Group, The State of Radio: 2007, at Jan. 5, 2007, at 17, http://www.arbitron.com/downloads/State_of_Radio_2007.pdf (last visited Mar. 17, 2007).

⁷²           Id. at 14, 17.

⁷³           iBiquity HD Radio Presentation at 3; Tom Lowry, HD Radio Still Taking the Rap, BUSINESSWEEK, Jan. 29, 2007, at http://www.businessweek.com/technology/content/ jan2007/tc20070129_381520.htm (last visited Mar. 13, 2007) (noting BMW’s announcement in January 2007 that it would become the first carmaker to offer factory-installed HD Radio receivers as an option in all of its 2007 models).

⁷⁴           See Tabletop & Clock HD Radios, RadioShack Home Page, at http://www.radioshack.com/family/index.jsp?categoryId=2032185&cp=2032057&allCount=17 &fbc=1&f=PAD%2FProduct+Type%2FHD+radio&fbn=Type%2FHD+radio (last visited Mar. 18, 2007).

⁷⁵           Associated Press, Wal-Mart to sell HD digital radio receivers, L.A. TIMES, Mar. 6, 2007, at http://www.calendarlive.com/tv/cl-fi-radio6mar06,0,7415452.story?coll=cl-tvent (last visited Mar. 18, 2007). 76 Broadband Internet is available to the vast majority of American consumers. See Industry Analysis and Technology Division, Wireline Competition Bureau, High-Speed Services for Internet Access: Status as of June 30, 2006, Jan. 2007, at 3 & Tbls. 14-16, at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270128A1.pdf (reporting that 99 percent of zip codes have at least one high-speed connection in service to an end user, and estimating (1) that high-speed DSL connections were available to 79 percent of the households to whom incumbent LECs could provide local telephone service as of June 30, 2006, and (2) that high-speed cable modem service was available to 93 percent of the households to whom cable

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