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XM RADIO ADOPTION LEADS STRONG INTEREST IN DIGITAL RADIO

LAS VEGAS -- Calling satellite radio “truly new audio format,” XM Satellite Radio said it had fastest rollout of new audio product “in the past 20 years.” Company activated 30,000 satellite radio customers in 60 days since launch of service and sold 34,000 sets, XM Vp-Mktg. Daniel Murphy said at CES here. In session, “Riding the Waves of a New Radio Landscape,” he said XM had “proven the technology and that it works coast to coast and also that consumers will pay for radio service.” Saying company had subscribers in every state, he said retailers reported satellite radio consumers weren’t typical mobile audio customers but were “more like high-end electronics consumers.” Sales data showed interest in all age groups and some vendors reported latent demand for satellite radio home receivers. XM estimated it would add 400,000 to 700,000 new subscribers in 2002.

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Key partners for XM are General Motors and OnStar auto telematics service, GM spokesman Rick Lee said on panel. XM receiver was introduced as $295 option in Nov. for 2002 Cadillac Seville and DeVille models. “Early buyer feedback shows a high level of satisfaction,” Lee said. Company plans to extend option to additional models in 2003 model year and fleetwide by 2005 model year or midcalendar year 2004, he said: Installed “satellite radios could represent 50% of the production mix in 5 years.”

XM competitor Sirius Satellite Radio announced Mon. at CES that it would roll out satellite radio service in 4 markets Feb. 14 with goal of providing national service by 3rd quarter. Markets reflect areas where consumers “spend a lot of time behind the wheel commuting and where there is a strong retail market,” Sirius Vp-Mktg. Douglas Wilsterman said. He stressed that nationwide service would remain commercial-free. Second phase of service debut will cover southwestern U.S. beginning in April and in Dallas/Ft. Worth, Tulsa, Albuquerque and Little Rock in May. Service will be available in the southern and central U.S. starting in June/July to Miami, Tampa Bay, Orlando, Indianapolis, Nashville.

Progress continues in development of in-band, on-channel (IBOC) digital AM/FM radio, iBiquity COO Ben Benjamin said. Next steps in process include FCC endorsement for technology and NRSC endorsement for AM portion in first half of this year, he said. Early transmission equipment would be available in that time frame, he said. Station conversion in major markets is expected to begin in 2nd half and rollout of receivers in first half 2003, he said, timetable confirmed by Kenwood spokesman on panel. Three key goals of digital AM/FM introduction are to make transition easy for: (1) Listeners who will receive service without subscription. (2) Broadcasters that will need inexpensive upgrade. (3) Regulators because service uses existing spectrum.