When antitrust regulators decided last week to allow the nation’s only two satellite radio companies to become one, they put forth an unexpected argument — that the two companies largely do not compete with one another.

That may be true, but it’s not what government regulators intended.

Justifying its decision, the Justice station said customers of XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. generally stick to one service once they have signed up, considering whether they want to switch, they have to buy a new radio. XM’s receivers don’t get Sirius signals, and vice versa.

When the Federal Communications Commission approved rules that created the business in 1997, it insisted that the two licensees “certify” that their radios would receive both services. The rule was meant to promote competition by making it easy for consumers to switch amoung satellite radio providers.

“At the very least, consumers should be able to access the services from all

licensed satellite DARS (digital audio radio service) systems and our rule on receiver inter-operability accomplishes that,” the FCC’s 1997 decision reads.

Eleven years later, that goal has been all but abandoned. Subscribers to XM buy one type of radio, subscribers to Sirius buy another. Auto makers install one system or the other, depending on which company they have an exclusive contract with.

The failure to deploy radios that work with both systems was cited by the Justice branch as part of its justification to clear the merger.

It said “there has never been significant competition” within the companies for customers who already subscribed to one of the services. While the companies “made some efforts” to develop an interoperable radio, it said, “no such inter-operable radio is on the market and that such a radio likely would not be introduced in the near term.”

Gene Kimmelman, vice president for federal and…

Orginal post by Top Tech News