The history of portable satellite radios is short compared to traditional over-the-air radio, but it has rapidly changed the face of radio listening like no other technology in recent memory. The two major satellite radio services, XM Satellite Radio and SIRIUS Satellite Radio, offer a stunning array of programming and compete fiercely for customers.

Their popularity has stunned many in the radio industry and with the advent of new, smaller, more convenient portable satellite radios, some industry veterans worry about the future viability of traditional broadcast radio.

How did satellite radio get started and what is its future? Let's take a look.

The Beginnings of Satellite Radio

The history of satellite radio begins in 1992, when the Federal Communications Commission (FCC) decided to set aside a portion of spectrum to be devoted to nationwide distribution of digital radio service via satellite. SIRIUS Satellite Radio and XM Satellite Radio bid huge amounts of money (at least $80 million each) for licenses to use this new allocation of spectrum, which were eventually awarded to them by the FCC.

Owning the right to use the spectrum, though, was only the first step. Even if they could start delivering satellite radio signals right away, there were no consumer-accessible portable satellite radios to receive the signal. Additionally, there was substantial debate within the radio industry about whether consumers would be willing to pay for new hardware and then pay a monthly subscription fee for radio service. After all, AM and FM radio broadcasts were available free all over the country.

Making a Business out of Satellite Radio

XM Satellite Radio and SIRIUS Satellite Radio set out to overcome these obstacles and make a real business out of portable satellite radios and satellite radio programming. They knew that to attract the most consumers they needed to offer a variety of hardware components that could be used in a variety of locations – home, work, and especially the car, where most radio listening occurs.

Working with electronics manufacturers already trusted and recognized by consumers (Sanyo, Panasonic, JVC, Kenwood, etc.), hardware development got underway. The results included portable satellite radios, receivers, and “plug and play” components for nearly every consumer application. Manufacturers built satellite radio receivers for cars, homes, offices, trucks, RVs, boats, and even airplanes.

On the programming side, XM and SIRUS put together an assortment of niche music stations that would have something to offer consumers with nearly any musical taste. Each station was programmed to appeal to a specific type of listener, and most were commercial-free. Programming originated primarily from New York, but also from other locations, plus XM and SIRIUS entered into collaborative agreements that would allow popular musicians, entertainers, personalities and others to perform live from the originating locations. This would give the services another unique selling point to attract consumers.

Dealing with resistance to a monthly fee, though, required a broader array of marketing, public relations, and strategies to communicate the benefits and advantages of portable satellite radios. XM and SIRIUS knew that the key to their success would lie in convincing consumers of the value they would receive while making the hardware widely available and affordable.

Spreading the Word

Portable satellite radios began to show up in a variety of places where consumers would find it easy to use them. One of the most important places for XM and SIRIUS to gain entry for the hardware was in cars and trucks, where consumers do the vast majority of their radio listening.

They collaborated with car and truck manufacturers to make portable satellite radios standard on many high-end luxury vehicles, and an affordable option on most other mid-range vehicles. For most of these consumers, the cost of a monthly subscription would not be prohibitive and by making it easy for them to access their services, XM and SIRIUS could entice consumers to try it out and start spreading the word about its value.

Portable satellite radios were also placed in boats and RVs, and standard receivers were heavily marketed for use in homes and businesses. Another innovation, introduced in November 2004, is the handheld version of XM Radio and SIRIUS Satellite Radio receivers. These devices were designed to appeal to people who want access to satellite radio services while running, walking, or otherwise moving out and about in locations other than their cars, trucks, homes or offices.

Another important component of spreading the word was establishing partnerships and marketing agreements with electronics retailers such as Circuit City, Best Buy, Target, Wal-Mart, and other well-known names. Working closely with retailers, XM and SIRIUS have greatly increased their presence with consumers and sales have steadily increased.

Why Pay for Radio?

Still, the bottom line question for most people is why pay for radio? The answer is in the benefits received with a subscription to satellite radio. Some of the most popular benefits include:

More channel choices (up to 150)

Commercial-free (music channels)

Live audio streaming of sporting events

Weather and traffic information (in major markets)

Clear, crisp digital signal

Signal available with no fading when driving long distances

Niche music stations to suit any musical taste

Assortment of sports, talk, and news stations

Coming Soon

Satellite radio service is in its infancy so it is inevitable that the technology and the features will continue to develop. XM Radio and SIRIUS Satellite Radio will have to devote resources to such innovations if they are to attract enough subscribers to become profitable.

For example, one feature that will soon be available in some areas real time traffic information delivered via satellite directly to the navigation system in the car. This information will appear as color-coded displays of the average speed of vehicles on specific roads, allowing the driver to select the travel route that is least congested at any particular time.

Other new options and ideas are inevitable over the next few years, so it is likely that portable satellite radios will continue to grow in popularity and become more common in vehicles, homes, offices, boats, RVs, and just about any other location that can be imagined.