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XM SATELLITE GAINS SUBSCRIBERS, COMPETITION

Q1 ’05 Numbers Looking Good, But Are Cell Phones a Problem?
XM Satellite Radio said Friday it added 540,000 new subscribers to is service during the first quarter, bringing its current subscriber total to 3.77 million and notching a 68% increase over Q1 ’04.

Roughly half of XM’s new subscribers come from people buying cars with XM radios already installed, but the company has also recently begun putting its radios in rental cars, some airliners and even Starbucks coffee shops, according to a Washington Post report. Other reasons for the subscriber uptick could include a shortage of XM’s popular portable “MyFi” receiver over the holidays, which could have pushed some new subscriptions in to the first quarter, and baseball fans signing up to hear games via XM’s exclusive deal with MLB.

At 3.77 million, XM has a major subscriber advantage over rival Sirius, which has only about 1.2 million subscribers. Still, XM lost $642.4 million last year, and Chairman Gary Parsons told a securities conference last week that he would not be opposed to sharing content with Sirius, though the two have up to now been aggressive rivals. A team of engineers from both companies are currently working on a new receiver capable of tuning in both services. “Interoperability” for the benefit of consumers is mandated by the companies’ FCC licenses.

Working together may become more important to XM and Sirius as companies like Palo Alto, Calif.-based MSpot roll out services designed to stream music, sports and talk radio to Internet-connected cellular phones. MSpot begins its service today over Sprint’s PCS Vision network.

The MSpot service is starting out with 13 channels, 8 of which will feature music. More channels will be added as demand increases, Chairman Daren Tsui told the New York Times. The service costs $5.95 per month.

The lower monthly fee, compared to $13 a month for either of the satellite services is one of the ways MSpot intends to compete with XM and Sirius. Another is that MSpot doesn’t require a dedicated receiver, and the signal can be picked up inside buildings. “Cell coverage may not be universal, but it's a lot better than satellite,” Tsui told the paper.

While MSpot’s initial channel selection may be dwarfed by the satellite companies’ arrays of hundreds of channels, Tsui says he has the ability to add an unlimited number of channels in the future.
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