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Behind the Scenes at SIRIUS Satellite Radio
by Douglas Dixon
Home and Satellites
Have you discovered satellite radio? For a monthly subscription of $12.95,
you could be enjoying some 120 different channels of almost every flavor of
programming -- news and sports and talk, plus commercial-free music in genres
ranging across pop, rock, electronic, hip-hop/R&B, country, Latin,
Christian, jazz/blues, standards, and classical. You can relax to your favorite
music on a long trip; catch up with financial or world news, regional traffic
and weather; brighten your day with dedicated channels for kids, family, women,
or comedy; or catch the big game with extensive national coverage of the NFL,
MLB, NBA, NHL, NASCAR, college football, and English soccer.
And satellite radio is not just for your car or truck or boat anymore. You
can enjoy this programming at home or in the office, as with satellite TV. And
now satellite radio is available in portable devices, so you can record your
favorite artists and songs and channels, and then bring them along with you even
when you are not driving.
The two licensed satellite radio broadcasters in the United States are SIRIUS
Satellite Radio (www.siriusradio.com)
and XM Satellite Radio (www.xmradio.com).
XM is the current leader, with more than 5 million subscribers, and SIRIUS
expects to have 3 million subscribers by the end of this year. SIRIUS has been
making a big splash lately, lead by Mel Karmazin, who joined SIRIUS as CEO from
Viacom / CBS in 2004. Since then, SIRIUS has developed channels with celebrity
hosts including Howard Stern, Martha Stewart, and Sen. Bill Bradley, Tony Hawk,
Satellite radio is a big business: SIRIUS has a market cap of $8 billion, and
its guidance as of mid 2005, was to expect to generate $225 million of total
revenue in 2005. But satellite radio is also still in start-up mode, as SIRIUS
expects an adjusted loss from operations of approximately ($540) million,
targeting that positive free cash flow could be reached as early as the fourth
quarter of 2006.
While the SIRIUS programming is broadcast from its studios in Rockefeller
Center in New York City, the engineering development for this start-up is
performed here in Princeton. It's the responsibility of this team to make the
breakthroughs that allow SIRIUS to best take advantage of its assigned satellite
radio bandwidth, and to develop new and cool receivers that excite and amaze
SIRIUS studios at company
headquarters in Rockefeller Center
"It's strange to think about a billion dollar company as a
start-up," says Terry Smith, senior vice president of engineering at
SIRIUS. But in early 2002, SIRIUS was already running behind XM. SIRIUS was not
going to launch its service nationally until later that summer, while XM had
already rolled out over the previous Fall, and had the additional advantage of
being backed by leading car, radio and satellite TV companies, including General
Motors, Honda, Clear Channel Communications, and DIRECTV.
"We had some technical hurdles that needed to be overcome", says
Smith. "Our technology was just late." SIRIUS was reliant on outside
companies for its technology and product development. "Our provider of
chips basically was a sole source," says Smith, "and they had the
intellectual property for themselves. So we were not in a very well leveraged
The solution for SIRIUS was to hire Smith away from Sarnoff Corp. (the former
RCA Labs, www.sarnoff.com) to grow a new
engineering facility in the Princeton area. The CEO of SIRIUS at that time was
Joseph Clayton, who had joined the company in November 2001, and later moved up
to be chairman of the board when Mel Karmazin became CEO in November 2004.
Clayton had worked with Smith during Clayton's tenure in marketing vice
president positions with RCA, General Electric and Thomson, at a time when
Sarnoff was deeply involved in the development of digital television, HDTV, and
"[Clayton] recognized that we needed to reduce the time-to-market, to
get our products and our technology into the marketplace," says Smith.
"He was concerned with making sure that the technology foundation
was in place so that we were able to drive our own destiny, and not rely on
third parties -- which led to me coming on board, and the creation of this
Smith had been with Sarnoff for 22 years, his entire career. He had joined
right out of college in 1979, after graduating from Notre Dame with a BS in electrical engineering. While at Sarnoff, he continued his
education at Drexel part-time, earning his masters in electrical engineering in
"I came up through the ranks there," he says, "getting into
engineering management positions, and eventually taking over as director of
consumer electronics for digital television. I had the great fortune of leading
three different programs for advanced television services, and was head of the
systems group that put together the Grand Alliance [for the U.S. HDTV standard].
And somewhere in between, we did DIRECTV as well."
Smith actually is second-generation RCA. His parents met at the RCA Camden
facility, where his father was an engineering manager for broadcast cameras. His
mother had an economics degree from Michigan, and was doing business analysis.
"The opportunities for women with college degree at that time were pretty
unique," says Smith.
Smith went into engineering, "though I actually thought I was going to
be a lawyer," he says. "I went through high school on the debating
team and did well in those types of things. So I thought that over time my
silver tongue would get me somewhere." However, he did not want to go
directly into prelaw. "I wanted to have something to fall back on," he
says. "Fortunately, I thought that was one of the opportunities that RCA
could provide me. I thought I could be there for a couple years, and then I
could go to one of the divisions, or perhaps get into patent law if I thought
that was interesting." Instead, he says, "over time, I enjoyed the
engineering more and more. I like the idea of working on my own stuff, and
helping other people work on their stuff."
Smith then joined SIRIUS in February 2002, to coordinate the engineering
activities and create a capability to develop its own silicon chips.
"I came at a fortunate time for filling out team," he says.
"At the time Hitachi had decided to close down their lab, and NEC had some
cutbacks as well. So we were able to identify some really tremendous and
talented people and get them to join the core team." Since then, he also
has added some 15 ex-Sarnoff people from the heyday of its work in
Smith began at SIRIUS by focusing on integrated circuit development, "so
that we can get low-cost, low-power, and small size with all the features."
"When we create our own silicon," he says, "we can choose the
partners we want to work with, and make sure that we're getting the best results
and the best pricing we possibly can."
Since then, the Lawrenceville site has grown to take on development of
consumer radio receiver products as well. "With our product management team
here we've gotten a lot more sophisticated with the kinds of things we want to
do," says Smith. "We are building up more on the consumer electronics
engineering side, utilizing a lot of manufacturing partners." SIRIUS also
has an engineering group in the Detroit area focusing on automotive
By now the Lawrenceville site has some 55 people, and is still growing. The
staff includes approximately 35 engineers, plus product management and a new
services group. "Having product management co-located here helps us out a
lot," says Smith. "We can bounce ideas off them, and make sure that
they are stretching us to really think about things. And we ground them when
their dreams exceed our reach."
The services group is developing new applications including traffic data
services, comprehensive aviation and marine weather data services, and vehicle
telematics services combining wireless data with vehicle monitoring and location
This is the new challenge for Smith and SIRIUS: "We have this digital
pipe into vehicles," he says. "We need to provide more effective means
of using it. And if we add in a return channel, we can create even more
Smith sees his charter to address three major issues:
- How to most efficiently utilize the available spectrum. "Basically,
creating more bits in the spectrum that we have," he says, "or making
more bits if we add additional spectrum."
- How to utilize those bits in the most efficient way. For example, with
engineers dedicated to audio and video compression schemes.
- How to invent different ways to utilize the spectrum. "That becomes a
nice blend of the technical and creative people here," he says, "and
working with the programming folks."
To use the available spectrum more efficiently, Smith's team recently
developed a "hierarchical modulation" technology that expands the
total network capacity by approximately 25 percent. "It adds another layer
of bits," says Smith, "without compromising the backwards
compatibility of existing equipment." SIRIUS trumped this technological
breakthrough in a corporate press release in June 2005, explicitly crediting
"SIRIUS' Advanced Development Team based in Lawrenceville, NJ."
Perhaps the most interesting ongoing challenge is developing products and
services that extend SIRIUS beyond its roots in music and talk radio for the
vehicular market. Having started with in-dash car systems that now sell for from
$200 to $1,900, SIRIUS and XM now offer home component systems (from $250 to
$2,000) and "plug-and-play" portable systems (from $50) that you can
bring with you from the car to the office and the home. For example, I've been
trying out the Sportster Replay portable unit ($169), which can be
removed from a docking unit in the car (it includes a FM transmitter to play
though the car radio), and then be inserted in a compatible home dock or boombox
unit to play at home or on the go.
Sportster Replay portable satellite radio
"Once people get used to [satellite radio] in the vehicle," says
Smith, "they want to see it in the home and the office." However,
these systems were originally optimized for vehicular use. "The signal
delivery from a satellite works great to provide a footprint across the United States," he says, "but makes it a lot tougher
to penetrate into buildings and homes."
SIRIUS and XM also use terrestrial repeaters that fill in gaps of coverage in
locations where buildings obstruct the satellite signal. SIRIUS has about 150
such repeaters, in some 120 major cities. There is one medium power
repeater in Trenton, which has a strong signal for about five miles, and a reach
of around 15 miles. However, "XM has about a thousand
repeaters," says Smith, "because they have very low elevation angles
in a lot of places, so they have to fill a lot more gaps than we do."
The difference is in the positioning of the satellites: XM uses two
satellites, (called 'Rock' and 'Roll') in
geostationary orbit, helpful for home use since your antenna can be
positioned for a fixed location, as with satellite TV.
The SIRIUS system utilizes three geosynchronous (but not geostationary)
satellites that orbit in a high elliptical pattern over North America, serving
the continental United States (and to approximately 200 miles off the coasts).
"The great advantage that gives us," says Smith, "is that we
always have at least one satellite at very high elevation relative to where you
are in the United States [60 to 90 degrees], so there are fewer structures that
will block our signal."
However, the disadvantage for home reception is that the satellites are a
moving target. But the motion of the high elevation satellite is over a small
area, so the answer, says Smith, is to "point your antenna towards
Minnesota -- you'll always see a satellite."
SIRIUS is working on better reception for the home, as well as offering
alternate paths for home reception. For a fixed installation like a satellite
TV, you can install a larger antenna. SIRIUS subscribers also can to listen to
the channels as streaming audio over the Internet. (There's also a guest
subscription available for trying out the service.) Or you can access the SIRIUS
programming through agreements with other services: SIRIUS is available on
satellite TV through the EchoStar DISH Network service, and on mobile phones on
the Sprint network.
However, says Smith, "in the grand scheme of things, this is an
entertainment company. We continue to develop and enhanced the technology to
support those activities, though we make the money off content and not
After all, SIRIUS and XM offer very similar services in many ways -- the same
pricing ($12.95 for a monthly subscription, and $6.99 for additional receivers),
and very similar numbers and kinds of channels, with some 120 channels of
commercial-free music across all genres, plus some 55 more channels with news,
sports, talk, and entertainment programming. SIRIUS has signed exclusive
personalities like Howard Stern (plus Martha Stewart, of you prefer), and
provides exclusive sports coverage for the NFL, NBA, and some 115 colleges
(including the Ivy League) -- while XM carries Major League Baseball, NASCAR,
and games from the ACC, Pac-10, and Big Ten. XM is available with General Motors
and Honda cars, Sirius radios are offered in more than 20 brands, including
Ford, Chrysler, Audi, Porsche, and Nissan.
Beyond the programming, the next frontier is in combining receiver products
and services, taking advantage of digital transmission and storage to expand
from just radio reception to digital media players and digital data services.
Since satellite radio is digital, it's easy to add a memory buffer so that,
for example, the Sportster receiver can provide a 44-minute replay capability to
catch a song or score that was recently broadcast. Even better, the digital
signal includes not only the audio broadcast, but also additional
"metadata" that describes the content of the broadcast, so these
receivers can display information about the currently playing channel, song, and
artist -- or the current score of the game.
But what about the times that you are walking or jogging or away from your
car and want to listen to your favorite channels? The satellite signal cannot
penetrate into the gym, or under heavy foliage, or even through your body.
Instead, SIRIUS is introducing a combination MP3 and satellite player that can
store up your favorite content when it is docked, and then play it back while
you are on the go. The SIRIUS S50 satellite wearable radio, scheduled to
be available in October for $359, includes 1 GB of shared memory to store up to
up to 50 hours of SIRIUS content, in combination with downloaded MP3 and Windows
Media WMA audio files. (The SIRIUS content is protected and locked to your
subscription, and therefore cannot be extracted from the device.)
SIRIUS S50 satellite wearable radio with home dock
Smith argues that having access to SIRIUS programming provides a better user
experience than needing to organize and download your own music library.
"The discovery process for content that you like is just so much
easier," he says. "We have the advantage of having people who are very
talented in how to craft music thematically, with enough variety that you can
all of a sudden trip onto things that are really great. You're able to follow
the lead of professionals to find a stream of content, and identify the ones
that you like."
"It's a great feature to have the metadata," says Smith. Not only
for the users, but also for the on-air personalities, who do not have to be
constantly telling you what music is being played. "It's interesting to see
things from that perspective as well," he says. "They can actually
spend their time on air telling you something you may not have known about that
artists, or where that song came from. It frees them up to be a bit more
creative about how they inject their personality, and the personality of the
The use of metadata is even more extensive -- it includes information about
what is being broadcast across all of the channels. The SIRIUS receivers
therefore can provide alerts when when one of your favorite artists or songs is
being played on any channel, or when your favorite team starts playing a game
(or even any time the score changes). The receiver even can generate a custom
screen that displays the scores from current games being played by your favorite
The digital data stream also can be dedicated to other uses, such as the new
traffic and weather data services. Smith's team is developing the initial
traffic service to integrate with in-car mapping systems, to add overlay icons
with alerts for traffic incidents and tie-ups.
"The challenge is how to provide the user experience," says Smith.
"How can you give them all these choices, and all the things to navigate,
and how do you do it particularly sensitive to the fact that they're driving
along at 60 miles per hour."
So how could SIRIUS next imagine adding video to its service, with plans to
offer two to three channels of children's programming in the second half of
To Smith, the issue was, "what can you do to enhance the user
experience. In the U.S., it's the rear seat video experience -- trying to
provide something that can entertain the younger kids in the rear
seats, and do so with fresh enough content that you won't drive the parents
bonkers with hearing the same Barney episode over and over again." Plus, he
says, "our automotive partners feel it adds some additional cachet to the
Of course, video does demand higher data rates than audio, although
displaying children's shows on a small-screen monitor does not require the kind
of quality as high-definition displays in the home. This need led to the team's
engineering breakthrough in using the spectrum more efficiently.
In only a few years, SIRIUS has evolved from in-car radio to portable media
players, and from audio broadcast to data services and now video. And Smith and
the SIRIUS team still see more potential for this digital pipeline from the sky.
Says Smith, "having people that came out of the digital video revolution
provided us with insights into how we can go into the market, and
efficiently send a lot of data services through this pipe."
"Given the wealth of talent that there is in this area," he says,
"it was an easy sell to base this facility here. It's a little less
expensive than New York, and relatively convenient for people to get back up to
the headquarters there. There is great engineering talent to
draw on, and that is important to us now because we are in growth mode to add
additional people to tackle more and more initiatives here."
"I was been very fortunate throughout my life," he says, "to
be in the right place, surrounded by great talent and smart people."
SIRIUS Satellite Radio
XM Satellite Radio