5 Reasons a Merger Won't Save XM and Sirius

Competition has only grown since the satellite radio pioneers announced their merger.

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Word came early today that the Federal Communications Commission appeared likely to let satellite radio pioneers XM and Sirius come together. The companies say they need to merge to keep their business thriving in the face of growing competition. Ha. If they thought they had problems, it's gotten worse in the 16 months that their merger proposal has languished in Washington bureaucracy.

Subscription growth at both XM and Sirius has dramatically slowed, as Silicon Alley Insider recently showed. The companies partly blame the slow economy and confusion caused by the drawn-out merger approval. But at least five competitors are on the rise that could help snuff satellite radio:

The iPod. It was one thing to have consumers carrying their portable music with them on streets, subways, and planes. But car-trapped listeners are the core audience for satellite radio, and most new dashboard stereos have jacks for attaching MP3 players. That allows people to be their own DJ, no longer subject to the blandness of conventional radio and less hungry for the niche stations on satellite.

Digital radio. New digital broadcasts answer satellite's sound quality. With the new technology, traditional radio stations now promise CD-quality music over FM broadcasts. The increased efficiency of digital tech means the stations can also offer subchannels of alternative streams. The digital broadcasts require new receivers to be heard, but prices are coming down and more cars are rolling off assembly lines with the capability.

Internet radio. Listeners can get thousands of radio stations streaming around the world across the Web, making webcasts a major competitor to all other forms of streaming music, talk, and news. Some of the programming comes from traditional broadcasters, but many more are from amateurs and pros with their own webcasts. The only question is how to get Internet radio when on the move, and that question is already being answered by numerous wireless technologies.

Cellphones. New, high-speed data networks mean people can get music streamed to their cellphones, many of which can double as media players and attach to car stereos. Some carriers already offer their own streaming music services. But wireless Internet also means that Web radio can compete with satellite wherever people are—or drive. You can check out a new application that iPhoneAtlas.com says will be available soon for the iPhone that will ease listening to Web radio via AOL.

WiMax. Streaming music over a new wireless network with purported superbroadband speeds remains a vague promise for the future (which is true of just about anything to do with WiMax). But WiMax backers say it could replace just about anything now delivered by satellite, cellphone, or even broadcast. At least one radio professional has tested Internet radio across WiMax, reporting with enthusiasm on Kurt Hanson's Radio and Internet Newsletter blog.