- The Washington Times - Tuesday, January 8, 2002

XM Satellite Radio Inc., the first company to charge for radio, has signed up 30,000 subscribers since it broadcast its first note little more than three months ago.
Yesterday’s announcement was the first time officials at the District company offered a glimpse into its customer base. XM had 28,000 subscribers on Dec. 31, meeting analysts’ expectations.
“Will people pay for radio? The answer is a resounding yes,” XM Satellite Radio Chief Executive Hugh Panero said yesterday at the Consumer Electronics Show in Las Vegas.
XM, also the first company to offer radio service via satellite, got its start Sept. 25 in Dallas and Fort Worth, Texas, and in San Diego. By November the satellite signal was available nationally.
Shares of XM fell $1.29, or 8 percent, on the Nasdaq Stock Market and closed at $14.85 yesterday.
As pleased as Mr. Panero was with the number of new subscribers, the speed with which XM signed up customers was just as gratifying, he said.
Satellite radio is the fastest-selling consumer audio product in history, based on XM sales since September, according to a study by the Yankee Group, a technology research firm in Boston.
Consumers bought 17,600 MP3 players and 7,400 compact disc players the former record holders in the first 60 days they were available.
XM’s rapid growth could give it a huge advantage over its only direct competitor, Sirius Satellite Radio Inc., the New York satellite radio company that will begin broadcasting Feb. 14 in four U.S. cities. Sirius won’t be available nationally until August, nearly a year after XM began beaming radio signals from a pair of satellites in orbit more than 22,00 miles above Earth.
But Sirius still expects to sign up 150,000 to 200,000 subscribers this year, Chief Executive Joseph Clayton said at the consumer electronics convention yesterday.
Sirius, which had planned to begin satellite radio service before XM until technical problems slowed it down, will charge slightly more than XM. Sirius will charge $12.95 a month for satellite radio service, and XM is charging $9.99 a month. Both offer 100 channels of music and information.
John L. Stone, an analyst at investment bank Ladenburg Thalmann & Co., had predicted XM would sign up 55,000 subscribers in 2001. That was the highest estimate among analysts.
Robert Kaimowitz, an analyst at investment bank SG Cowen, predicted the company would have 25,000 subscribers at year’s end and 350,000 customers by the end of 2002.
XM hasn’t predicted how many customers it will have at year’s end.
Despite charging a monthly fee for radio, XM receivers are in high demand and some retailers have had difficulty keeping XM products in stock.
“They have been moving very, very well. The issue on some products is availability. There were times during the holiday when nobody had certain products,” said Alan Rimm-Kaufman, vice president of marketing at Charlottesville electronics retailer Crutchfield Corp.
Mr. Panero predicted an unresolved dispute between XM and wireless companies will not slow the satellite radio company’s subscriber growth. The Federal Communications Commission is mulling over how to deal with the objections of wireless companies that want to restrict the use of high-powered repeaters by XM and Sirius.
The repeaters boost the strength of satellite signals in areas where buildings obstruct transmissions.
The FCC granted XM and Sirius temporary approval Sept. 17 to use the repeaters, and the regulatory agency is expected to make a final decision on the issue by March 17.
Wireless companies say the repeaters could interfere with some services, which haven’t been introduced to consumers. The interference could occur because wireless and satellite companies operate side by side on the wireless spectrum. To prevent interference, wireless companies have proposed XM and Sirius use repeaters that operate at two kilowatts after 2006.
XM and Sirius want approval to use some repeaters that operate at up to 40 kilowatts. Mr. Panero said any potential problems that high-powered repeaters cause wireless companies can be solved through engineering.

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