Stop me if you’ve heard this before…

A few months ago, SiriusXM violated the spirit, if not the letter, of the FCC ruleset governing the merger by raising the rates on secondary radios in the family plan by $2.00/month, and by adding a $3.00/month charge for the on-line “service.” This caused me to reluctantly cancel one of my three subscriptions.

Then they began to charge a $15 fee for equipment swaps (these have always been free, at least on the XM side) they don’t even tell their subscribers about! This means if you buy a new radio for any reason and change the ID of the subscribed radio, they will charge you $15 for the privilege, just as they charge a $15 fee to initially register your radio. I don’t quite understand it, but you need to pay them for the right to pay them (?!), even if your radio is stolen or lost, and you spend a boatload of money to buy a new radio.

Now continuing the “nickel-and-diming” of their loyal subscribers, effective July 28, 2009 they are raising the rates for primary radios for everyone not on a lifetime plan by $2.00/month (actually $1.98), and “family plan” radios by $1.00/month (actually $0.97). Of course, they are prohibited by the FCC until next year from raising the rates, but they are doing it anyway.

How can they get away with this?

Simple; by falsely claiming it is the increase in their copyright fees paid. And when I said, “falsely,” I wasn’t kidding. Let me tell you they way I read things, and please, if you can find any place I am incorrect, please correct me in the comments section. Because IANAL, this is a layman’s interpretation (but from someone reasonably well-versed in the English language).

According to the FCC order approving the merger (see pp 47, paragraph 107):

…after the first anniversary of the consummation of the
merger, the combined company may pass through cost increases incurred since the filing of the merger application as a result of statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees.

Ok, the company applied for the merger on March 20, 2007; the royalty rate in effect on that date was 6% of subscriber revenue, minus credit card fees and other non-music revenues (advertising on non-music stations, etc., etc.). The current royalty rate, which will be in effect on July 28, 2009, is 6.5%. The cost increase between 6.0% and 6.5% is 0.5%. 0.5% of $12.95 comes out to ~6.5-cents…round it to 7-cents.

For the mathematically-challenged, seven cents does not equal two dollars.

Ok, maybe I misread this. Let’s say that regardless of the meaning of the plain-English language in the order, they are allowed to immediately charge the entire 6.5% royalty fee. 6.5% of $12.95 comes out to ~84.2-cents.

For the mathematically-challenged, eighty-four cents does not equal two dollars.

So right now they are paying 84-cents/subscriber (actually less as noted above, but nevermind that now) as royalty fees. Next month, since we will be paying an additional $1.98, they will not only pocket the 84-cents they are paying, but also increase their revenue by an additional $1.14. This is a clear violation of the terms of the merger agreement with the FCC.

So, lessee…the country is in the middle of a major recession, where discretionary income is vanishing faster than a snowflake in July (or faster than our retirement savings vanished at the end of last year). SiriusXM has already raised prices on their most-loyal (multi-radio) subscribers. They have lowered the sound quality of every channel, exactly as I repeatedly warned they would, to the point where some of the music channels are depressing, and some of the talk channels are practically indecipherable. And they can’t seem to add subscribers, partially because they made so many bad deals with car manufacturers to install their radios, placing almost all of their eggs in the new-car basket, and the bottom fell out of the new car market, and partially because they are already too expensive in a landscape where there are so many less-expensive alternatives. So how do they fix this?

They charge their loyal customers more, much more than they are permitted to charge according to their agreement with the FCC. Seriously, how amazingly stupid is the current management of SirusXM?

No, I haven’t yet decided what I’m going to do about this, other than to table the decision for a while; after all, I have a month to calm down and make a rational decision. But in general, it is insane for any company to intentionally lower the value of the product, then raise rates for that service, then expect everyone to sit on their hands and take it. There is currently one reason I continue to subscribe…The Bob Edwards Show. Why is this company working so d*mned hard to tip the scales away from my continued subscription?

And while we’re being depressed, remember that effective July 28, 2011, the mandated “price increase freeze” they are going to violate next month anyway is over. Assuming they survive that long, something I am not betting on, they will then be able to charge whatever they want. Yippee.

It’s amazing how they have managed to turn someone who was a true believer, a zealot even, into someone actually considering canceling his subscription completely, and feeling a little apologetic about having promoted the service for all these years. And before I end this rant, if anyone knows of any law firm planning a class-action suit against SiriusXM because of this blatant violation of the FCC terms of merger, please send ‘em my way. Yeah, I am that angry.