How bout looking at it in this simplistic way, without getting into the SIRI/XM squabble.
Sorry, I didn't know I was involved in some squabble. My viewpoint for the last 5 years is that both of these companies had poor business models.
I'm not sure that how they count all this is all that important as long as in the end we know how many subs there are, what op expenses are, what cap ex is etc.
Ahhh! You see.. You are trying achieve financial metrics for a subscriber model by using a non-subscriber business model.
You have Op Ex, and Cap Ex, and Revenues.. But, the most important variable in a Subscriber model is CHURN. CHURN kills! Especially if you don't have a methodology to recover your CPGA if the relationship fails.. Like the $200 termination fee you cell phone provider charges.
This is the biggest reason these SDARS models look so bad. The CPGA is High, and the ARPU is LOW. And there is no guarantee that you will ever get your CPGA plus cost of capital returned.
Alternative delivery methods will cost money too, wireless data plans are not cheap at this point, and the type of all you can eat data you're referring towon't be either..
Well, a system like Media Flo is pretty cheap. What they are in effect doing is compressing NTSC Video Channels (like the Sat TV providers do with video, and the SDARS companies do with music) into Forward Link Only Data. There is no real system overhead as with Wireless Data Plans. Because they are just transmitting outbound (Forward Link) data. They leverage the propagation characteristics of nationwide Channel 55 spectrum at 700 Mhz. Using these lower frequencies provide much wider coverage for a given power level than that of the SDARS spectrum. They will basically use Off the Shelf TV transmitters to provide signal coverage, and much, much higher radiation levels. 5 Megawatts vs. several kilowatts in the case of SDARS most powerful transmitters. They are then leveraging their position as the number 1 supplier of CDMA baseband chips in cell phones to integrate the receiver for Media Flo into their base band chip sets. So the cost of adding Media Flo into a Cell Phone will be nearly ZERO from a manufacturing stand point. Doesn't take a rocket scientist to see the scaleability of this system into the automotive market. |
