Tuesday, June 17, 2008

The revolution will not be broadcast on satellite radio

It looks like the Sirius and XM satellite radio merger will go forward, but not before some representatives hold the deal hostage so that they can steer some business towards a favored private-equity firm. Apparently the new über-station will not be black enough:

Members of the black caucus on Capitol Hill have been arguing for the merged company to lease five times that amount of spectrum to companies owned by racial minorities. Short of that, caucus members have warned in letters to the commission and meetings with Martin, they would oppose the merger.

In an interview yesterday, Rep. G.K. Butterfield (D-N.C.), chairman of the Congressional Black Caucus's working group on satellite radio, called Martin's proposed compromise "completely unacceptable."

The article doesn't really explain why, however, these esteemed black members of our illustrious legislative branch of government are all of the sudden so worried – is part of the merger a plan to fire all of the black DJs? Why is the situation right now tenable, but if they merge, it will not be? But anyway, I digress. The most shocking party is how blithely Butterfield admits that he's engaging in blatant rent-seeking on behalf of a "minority-run" firm:

Butterfield said he got the idea for the 20 percent set-aside for minority-owned companies from Georgetown Partners, a minority-run private-equity firm based in Bethesda, and its managing director, Chester Davenport.

But wait – it gets better! Despite the fact that "he hoped Georgetown Partners would fill that role" (i.e., the 20% stake set aside for minority-owned companies), "Butterfield said he was not pressing for the 20 percent leasing arrangement on behalf of Georgetown Partners or anyone else." Yeah right.

...by the way, I should add that I think that all discussion of dividing the bandwidth is pretty ridiculous in the first place. The FCC came into being to divide up the spectrum and stop anyone from interfering with anyone else's transmission. However since then, we've gained a more nuanced view of the spectrum, and it's now generally understood that it can be infinitely divided. Technology that can better parse out the individual signals is already available and would be developed at a much faster pace if the government were to relinquish control of the airwaves. That's the theory behind the open spectrum movement, which I've talked about before.

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