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Tuning In to Satellite Radio

Two satellite-radio companies are ready to fight for your dashboard.
January 25, 2002

If you live in a large urban area, you probably pull in 35 to 50 FM radio stations, tops. And even then, your favorite station might crackle and fade once in a while. Drive 40 miles and it’s gone. But consider this alternative: 100 crystal-clear radio channels that never fade, no matter how far you travel nationwide.

Two satellite radio services, XM (who started broadcasting in November) and Sirius, hope you’ll be willing to pay a monthly fee of $10 to $13 to receive digital audio everywhere you roam. Proponents say this could do for radio what cable (and satellite) did for TV: deepen programming and raise quality in a medium that essentially hasn’t changed in decades.

“This is a technology shift we’ve been waiting for,” says Karl Brauer, editor in chief of the automotive Web site “It’ll take some time to get people to pay. Subscribing to radio will seem weird to people. But subscribing to TV seemed weird too.”

AM, FM, and now XM

XM, whose radios are manufactured by Pioneer and Sony, launched its two satellites, aptly named Rock and Roll, last March. As of November you could buy an XM satellite radio receiver for $300 to $600 and pay $9.99 a month for 100 channels of digital broadcasting, most of which is commercial free.

The XM signal originates from a broadcast operations center in Washington, D.C. and is transmitted to the satellites orbiting 36,000 kilometers above earth. The satellites rotate at the same rate as the earth, which keeps them in geostationary position above the eastern and western ends of the U.S.

The Rock satellite broadcasts 4.7 seconds ahead of Roll, providing a memory buffer. If an XM subscriber travels through an underpass or tunnel, the signal sustains for nearly five seconds. After that, it fades. The antenna on your car also seeks a signal from earth-based amplifiers called terrestrial repeaters, which help avoid signal blockages from tall buildings and other potential obstructions. There are about 1,000 XM repeaters in the U.S., amplifying the signal for city dwellers who want to receive the line-of-sight signal.

“The radio is constantly choosing the best signal source,” says Chance Patterson, vice president of corporate affairs at XM. “Rock, Roll, or the nearest signal repeater.”

Live from New York: Sirius Competition

Sirius, like XM, offers 100 digital audio channels. The music stations will be commercial-free, while some talk and entertainment channels, such as CNBC and ESPN, will have on-air ads. While the cost is $12.95 a month, a few dollars more than XM, the receivers-expected from Kenwood, Panasonic, Clarion and Jensen-fall into the same price range.

The company’s broadcast studios are located in Manhattan. From there, the audio bit stream travels via fiber optic cable and microwave, feeding an uplink station in Vernon, NJ. The uplink station transmits to the satellites, which in turn broadcast to your car.

Sirius’s technology is slightly different from XM’s. Unlike XM’s geostationary satellites, Sirius crafts rise and set over the U.S. Once the satellite moves below the horizon, its transmission cannot be received. So Sirius uses three satellites, two of which are always above the country, beaming their signal from a highly elliptical orbit tens of thousands of kilometers up.

“The higher the angle, the better your chance of receiving the signal,” says Mark Kalman, vice president of national broadcast studios for Sirius. Like XM, Sirius also provides a memory buffer of almost five seconds. “The receiver gets two satellite signals,” continues Kalman, “but only needs one to output audio. It works like an anti-skip mechanism on a CD player.”

Kalman says Sirius needs fewer terrestrial transmitters because of its higher satellite transmissions. The company uses 96 repeaters (compared to XM’s 1,000) around the U.S. as gap filler in cities, in what Kalman calls “urban canyons” where buildings might block the signal.

On the Road

Currently, there’s no definitive way to determine which company will win out. While Sirius’s high-flying satellites may broadcast a clearer signal, and XM’s repeaters may fill in more dark spots, the real test will come with programming and marketing. And here too, the playing field is pretty even.

For example, car makers have begun to align themselves with one of the two satellite radio technologies. Sirius announced deals with Ford Motor, Chrysler, BMW, Mercedes, Dodge and Jeep. Honda is an investor in XM, and General Motors-who owns Saab, Chevrolet, Saturn, Pontiac and many others-plans to offer XM radios on all its cars within five years. Considering that about 17 million new cars are sold in the U.S. each year, this has strong distribution potential. And other indicators, such as a recent prediction from the Yankee Group, a Boston-based analyst firm, that in five years more than 20 million Americans will subscribe to satellite radio services, bode well for the fledgling industry.

Robert Mazer, a partner who specializes in telecommunications at Vinson & Elkins and former staff attorney for the FCC, sounds a cautionary note. “We’ve seen companies with large capital investments, like [satellite telephone service] Iridium, go up in smoke,” he says. But unlike Iridium, whose two-way satellite-system increased in cost as its customer base expanded, satellite radio is far less expensive to maintain, no matter how many people sign on. “The question,” Mazer says, “is will people buy it?”

If these early indications are accurate, they most likely will.

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