Satellite Radio Sales to Rise, but Will Customer Satisfaction Follow?

Ever since the FCC blessed the union of Sirius and XM to form one satellite radio company, opinions have run the gamut. At least one analyst firm expects total unit sales to continue rising, but as a long term subscriber to one of the services, I wonder whether some of the inherent limitations I’ve found, and others that might come up, are going to cap the potential popularity.

The reactions to the merger have been widespread:

• Some people think that the new company is getting a bad deal because of the influence of the National Association of Broadcasters, which represents the terrestrial radio industry.
• Some say that shareholders are getting a raw deal.
• iSuppli expects the merger to reassure vehicle manufacturers and help increase satellite radio unit sales linearly to 8.9 million units annually by 2014.

Sweep all of that away for a moment. I think that the success of this merger has some enormous barriers, almost all of which are within the control of the company. Choices are going to be confusing, making sorting through digital broadcast, cable, and satellite television offerings seem easy by comparison.

There’s too much “some of this” and “part of that,” with prices that are likely to rise. Perhaps that will be necessary for the business model, but given the poor level of customer service that I’ve seen with at least one of the services, the company could price itself out of consumer buying decisions.

The reason this is so confusing is that, by and large, the new entity will continue looking like two companies. Complicating the balkanization of the audience is a delay until next year in availability of dual-mode radios, which would allow customers to get stations from either service.

Another problem that less certainly answered by choices of the organization is the problem in using satellite radio in a car. Remember that iSuppli thinks that automobile adoption will be a critical driver of sales. However, if you aren’t driving in a flat area with a good southern exposure, the signal can fade in and out. Hardly an experience that one might choose as an expensive option.

No matter how many radios ship, if people cannot easily pick a plan that gets them what they want, and then cannot easily hear what they paid for, expect that the only thing going up will be a roll of eyeballs, not the stock price.

XM satellite uplink image via Flickr user diametrik, CC 2.0.