Federal Communications Commission FCC 08-177 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of XM Radio, Inc. ) ) ) ) ) ) File Nos. EB-06-SE-148 and EB-06-SE-356 Acct. No. 200832100062 FRN No. 0007714579 ORDER Adopted: July 25, 2008 Released: August 5, 2008 By the Commission: Chairman Martin and Commissioners Adelstein and Tate issuing separate statements. 1. In this Order, we adopt the attached Consent Decree entered into between the Federal Communications Commission (“Commission”) and XM Radio, Inc. (“XM”). The Consent Decree terminates investigations by the Commission into whether (a) certain radio receivers intended for use with XM’s satellite radio service and manufactured and marketed by or on behalf of XM were in compliance with Section 302(b) of the Communications Act of 1934, as amended, (the “Act”),1 and Parts 2 and 15 of the Commission’s rules;2 and (b) XM constructed and operated terrestrial repeaters without Commission authorization in violation of Section 25.120 of the Commission’s Rules.3 2. The Commission and XM have negotiated the terms of the Consent Decree that resolve these matters. A copy of the Consent Decree is attached hereto and incorporated herein by reference. 3. After reviewing the terms of the Consent Decree and evaluating the facts before us, we find that the public interest would be served by adopting the Consent Decree and terminating the investigations. We do not come to this conclusion easily. The apparently intentional nature of some of the violations resolved by this Order and Consent Decree and the apparent involvement of certain XM personnel in these violations are very troubling. Indeed, the ability and willingness to conform one’s conduct to the requirements of the Commission’s Rules are central to the qualifications of any Commission licensee. We must balance our concern, however, against the public’s interest in the continued availability and viability of XM’s satellite radio service and the impact on the public and other licensees that XM’s violations precipitated. These considerations, taken together with the rigorous oversight and reporting obligations and substantial voluntary contribution prescribed in this Order and the Consent Decree, persuade us that settlement of these matters would best serve the public interest. 4. In the absence of new material evidence relating to this matter, therefore, we conclude that our investigations raise no substantial or material questions of fact as to whether XM possesses the basic qualifications, including those related to character, to hold or obtain any Commission license or authorization. 1 47 U.S.C. § 302a(b). 2 47 C.F.R. § 2.1 et seq. and § 15.101 et seq. 3 47 C.F.R. § 25.120. Federal Communications Commission FCC 08-177 2 5. Accordingly, IT IS ORDERED that, pursuant to section 4(i) of the Act,4 the Consent Decree attached to this Order IS ADOPTED. 6. IT IS FURTHER ORDERED that the above-captioned investigations ARE TERMINATED. 7. IT IS FURTHER ORDERED that all third-party complaints against XM before the Commission related to the above-captioned-investigations as of the date of this Consent Decree ARE DISMISSED. 8. IT IS FURTHER ORDERED that a copy of this Order and Consent Decree shall be sent by first class mail and certified mail, return receipt requested, to counsel for XM, Scott Blake Harris, Esq., Harris, Wiltshire & Grannis LLP, 1200 Eighteenth St., NW, Washington, DC 20036 and to James S. Blitz, Esq., Vice President and Regulatory Counsel, 1500 Eckington Place, NE, Washington, DC 20002- 2164. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 4 47 U.S.C. § 154(i). Federal Communications Commission FCC 08-177 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of XM Radio, Inc. ) ) ) ) ) ) File Nos. EB-06-SE-148 and EB-06-SE-356 Acct. No. 200832100062 FRN No. 0007714579 CONSENT DECREE The Federal Communications Commission (“Commission” or “FCC”) and XM Radio, Inc. (“XM”), by their authorized representatives, hereby enter into this Consent Decree for the purpose of terminating the Commission’s investigations into whether (a) certain radio receivers intended for use with XM’s satellite radio service and manufactured and marketed by or on behalf of XM were in compliance with Section 302(b) of the Communications Act of 1934, as amended, (the “Act”),1 and Parts 2 and 15 of the Commission’s rules;2 and (b) XM constructed and operated terrestrial repeaters without Commission authorization in violation of Section 25.120 of the Commission’s Rules.3 I. DEFINITIONS 1. For the purposes of this Consent Decree, the following definitions shall apply: (a) “Act” means the Communications Act of 1934, as amended, 47 U.S.C. § 151 et seq. (b) “Adopting Order” means an Order of the Commission adopting the terms of this Consent Decree without change, addition, deletion, or modification. (c) “Bureau” means the Enforcement Bureau of the Federal Communications Commission. (d) “Commission” and “FCC” mean the Federal Communications Commission and all of its bureaus and offices. (e) “Complaints” means third-party complaints that may have been received by, or are in the possession of, the Commission or Bureau alleging that certain radio receivers intended for use with XM’s satellite radio service and manufactured and marketed by or on behalf of XM are not in compliance with Section 302(b) of the Act and Parts 2 and Part 15 of the Rules, or that XM failed to comply in all respects with the special temporary authority to operate its terrestrial repeaters granted pursuant to Section 25.120 of the Rules. (f) “Compliance Plan” means the program described in this Consent Decree at paragraph 10. 1 47 U.S.C. § 302a(b). 2 47 C.F.R. § 2.1 et seq. and § 15.101 et seq. 3 47 C.F.R. § 25.120. Federal Communications Commission FCC 08-177 2 (g) “Effective Date” means the date on which the Commission releases the Adopting Order. (h) “Investigations” means (i) the investigation in File No. EB-06-SE-148 commenced by the Bureau’s April 20, 2006 Letter of Inquiry4 into the manufacture, authorization, importation, distribution and marketing of the Radio Receivers; and (ii) the investigation in File No. EB-06-SE-356 commenced by the Bureau’s February 15, 2007 Letter of Inquiry5 relating to XM’s operation of its terrestrial repeaters. (i) “Parties” means XM and the Commission. (j) “Radio Receivers” means all satellite radio receivers with built-in wireless FM modulators manufactured, sold or distributed for use with XM’s satellite radio service on or before the Effective Date under FCC ID Numbers BGAXMXP01, RS2SA10101, RS2R101, RS2SA10177, RS2SA10113, RS2GEX-AWARE1, RS2TXM 1000, RS2SA 10085, SICXR9, RS2GEXINNO1, RS2YX-M1, and RS2YP-XZC. (k) “Rules” means the Commission’s regulations found in Title 47 of the Code of Federal Regulations. (l) “XM” means XM Radio, Inc. and its predecessors-in-interest and successors-in- interest. II. BACKGROUND 2. Pursuant to section 302(b) of the Act6 and Parts 2 and 15 of the Rules,7 certain radio frequency devices, including wireless FM modulators, must be authorized in accordance with the processes set forth in the Rules and comply with all applicable technical standards and labeling requirements prior to importation into, or marketing in, the United States. On April 20, 2006, the Bureau issued a Letter of Inquiry to XM in File No. EB-06-SE-148 initiating an investigation into the manufacture, authorization, importation, distribution and marketing of certain satellite radio receivers (with wireless FM modulators) intended for use with XM’s satellite radio service.8 3. When the Commission adopted service rules for the Satellite Digital Audio Radio Service (“SDARS”), it recognized that some SDARS applicants intended to use terrestrial repeaters to improve reception of the service in “urban canyons” and other areas where it might be difficult to receive SDARS signals transmitted by satellite, and it sought comment on the rules that should be applicable to those 4 See Letter from Kathryn S. Berthot, Deputy Chief, Spectrum Enforcement Division, Enforcement Bureau, FCC, to William J. Bailey, Senior Vice President, Regulatory and Government Affairs, XM Radio Inc. (April 20, 2006) (“April 20, 2006 LOI”). 5 See Letter from Kathryn S. Berthot, Deputy Chief, Spectrum Enforcement Division, Enforcement Bureau, FCC, to James Blitz, Vice President & Regulatory Counsel, XM Radio Inc. (February 15, 2007) (“February 15, 2007 LOI”). 6 47 U.S.C. 302a(b). 7 47 C.F.R. §§ 2.1 et seq. and 15.1 et seq. 8 See April 20, 2006 LOI. Federal Communications Commission FCC 08-177 3 repeaters.9 Pending adoption of permanent rules for terrestrial repeaters, the FCC has authorized repeaters through the grant of special temporary authority (“STA”) pursuant to Section 25.120 of the Rules. XM filed an STA request on July 12, 2001, to begin commercial service using its terrestrial repeater network, along with subsequent STAs10 through September 2006, which were granted per the specifications in XM’s requests.11 4. On September 20, 2006, XM voluntarily disclosed to the Commission that it had constructed and was operating 479 repeaters for which it had not asked for authorization or which varied either slightly or significantly from what it was originally authorized to do and thus operated unauthorized and in an unlawful manner. Of the 479 repeaters, there are 19 repeaters for which it had not asked for authorization, four of which continue to operate. Of the remaining 460 repeaters, 317 of them continue to operate unauthorized and in an unlawful manner.12 Some repeaters had multiple violations. Specifically, there are 711 violations associated with these 460 repeaters, 354 of which varied slightly and 357 of which varied significantly from what XM was originally authorized to do. There are 495 violations associated with the 317 variant repeaters XM continues to operate, 136 of which varied significantly from what XM was originally authorized to do and 359 of which varied slightly. The Enforcement Bureau (“Bureau”) sent an LOI to XM on February 15, 2007.13 XM submitted a response to the LOI on March 12, 2007.14 III. TERMS OF AGREEMENT 5. Adopting Order. The Parties agree that the provisions of this Consent Decree shall be subject to final approval by the Commission by incorporation of such provisions by reference in the Adopting Order without change, addition, modification, or deletion. 6. Jurisdiction. XM agrees that the Commission has jurisdiction over it and the matters contained in this Consent Decree and has the authority to enter into and adopt this Consent Decree. 7. Effective Date; Violations. The Parties agree that this Consent Decree shall become effective on the date on which the FCC releases the Adopting Order. Upon release, the Adopting Order and this Consent Decree shall have the same force and effect as any other Order of the Commission. Any violation of the Adopting Order or of the terms of this Consent Decree shall constitute a separate violation of a Commission Order, entitling the Commission to exercise any rights and remedies attendant to the enforcement of a Commission Order, including imposition of the maximum statutory forfeiture for any such violations. Similar penalties shall be imposed for any violation of the underlying rules at issue in this proceeding. 9 Establishment of Rules and Policies for the Digital Audio Radio Satellite Service in the 2310-2360 MHz Frequency Band, Report and Order, Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 12 FCC Rcd 5745, 5810 (1997). 10 SAT-STA-20020815-00153; SAT-STA-20031112-00371. 11 See File No. SAT-STA-20010712-00063. 12 Of the repeaters that were powered down, several have other, less significant violations associated with them. 13 See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau, FCC, to James Blitz, Vice President and Regulatory Counsel, XM Radio, Inc. (February 15, 2007). 14 See Letter from James Blitz, Vice President and Regulatory Counsel, XM Radio, Inc. to Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau, FCC (March 12, 2007). Federal Communications Commission FCC 08-177 4 8. Termination of Investigation. In express reliance on the covenants and representations in this Consent Decree and to avoid further expenditure of public resources, the Commission agrees to terminate its investigations and dismiss the complaints. In consideration for the termination of said investigations and dismissal of the complaints, XM agrees to the terms, conditions, and procedures contained herein. The Commission further agrees that in the absence of new material evidence, the Commission will not use the facts developed in these investigations through the Effective Date of the Consent Decree, or the existence of this Consent Decree, to institute, on its own motion, any new proceeding, formal or informal, or take any action on its own motion against XM concerning the matters that were the subject of the investigations or with respect to XM’s basic qualifications, including its character qualifications, to be a Commission licensee or hold Commission authorizations, provided, however, that the Commission may consider the facts in this proceeding in any future proceeding involving violations by XM of the same rules at issue in this proceeding or involving misrepresentation or lack of candor by XM in its dealings with the Commission. 9. Terrestrial Repeaters. With respect to any of the 100 repeaters listed in Attachment C, within a period of 60 days from the Effective Date of this Consent Decree, XM shall cease operating 50 of these repeaters and must bring the remaining 50 repeaters into compliance with the specifications that they were originally authorized or cease operating them. The Commission, as of the Effective Date of this Consent Decree, shall also grant XM’s request for STA to operate for a period of thirty (30) days15 those repeaters for which it seeks authority listed in Attachment D. Concurrently, the Commission shall place on public notice XM’s request for STA to operate these repeaters for a period of 180 days.16 10. Compliance Plan. For purposes of settling the matters set forth herein, XM agrees to implement a Compliance Plan related to future compliance with the Act, the Commission’s Rules, and the Commission’s Orders. XM will submit a copy of the Compliance Plan to the Bureau prior to the Effective Date. The Plan will include, at a minimum, the following components: (a) FCC Compliance Officer. XM has hired an FCC Compliance Officer, who is responsible for overseeing the FCC-related aspects of the company’s operations, ensuring XM’s compliance with all FCC Rules, and serving as point of contact for XM management, employees, FCC staff, and the public with reference to XM’s FCC regulatory compliance. The FCC Compliance Officer will report directly to XM’s General Counsel. 15 See SAT-STA-20061002-0014. The conditions for all 30-day STA grants include but are not limited to: 1. Any actions taken as a result of this STA are solely at the applicant’s own risk. This STA shall not prejudice the outcome of the final rules adopted by the Commission in IB Docket No. 95-91. The issue concerning EIRP raised by the WCS Coalition will be addressed in that proceeding. Operations prior to such action will be subject to condition 2 below. 2. Operation of all SDARS repeaters authorized pursuant to this STA is on a non-interference basis with respect to all permanently authorized radiocommunication facilities. The operator shall provide the information and follow the process set forth in paragraphs 14 and 17 in 16 FCC Rcd 16773 (Int’l Bur. 2001) and 16 FCC Rcd 16781 (Int’l Bur. 2001), as modified by 16 FCC Rcd 18481 (Int’l Bur. 2001) and 16 FCC Rcd 18484 (Int’l Bur. 2001). 16 See SAT-STA-20061013-00119. These repeaters in Attachment C are a subset of the STA requests made by XM on October 2, 2006, as modified by XM’s filing of March 22, 2007. The same conditions noted above would apply to any 180-day STA, if granted. See note 19, above. Federal Communications Commission FCC 08-177 5 (b) Equipment Design and Certification. By September 1, 2008, XM will adopt a Procedural Guide for satellite radio receivers (“Procedural Guide”) establishing step-by- step procedures that XM employees must follow in connection with testing and obtaining FCC certification of any new radio receivers, as well as making any modifications to existing radio receivers where such changes may implicate FCC rules or certifications. XM will submit a copy of the Procedural Guide to the Bureau within five days of its adoption. In addition, XM will implement the following internal procedures related to equipment design and certification for radios intended to be sold at retail: (i) the FCC Compliance Officer will have ultimate responsibility over FCC testing and certification; (ii) authority over the design and manufacture of XM radio receivers will be separated from authority over FCC testing and certification for those radio receivers; (iii) prior to commencing manufacturing of commercial quantities of any devices governed by FCC rules, the FCC Compliance Officer will be required to certify directly to XM’s Chief Executive Officer and General Counsel that such device has been designed to comply with those rules; and (iv) the FCC Compliance Officer will supervise the audit of randomly selected radio receivers manufactured for retail distribution in order to help ensure the continued compliance of those devices with FCC rules. (c) Modification of Vendor Agreements. XM will ensure that all new agreements it enters into with vendors to manufacture radio receivers specifically require that such devices be manufactured in accordance with specifications provided or approved by XM and in compliance with applicable FCC rules. All existing agreements will be conformed to similarly ensure that devices are manufactured in accordance with specifications provided or approved by XM and in compliance with applicable FCC rules. (d) Repeater Licensing and Modifications. To ensure its compliance with FCC rules relating to its terrestrial repeaters, XM will adopt a Repeater Change Guide establishing procedures to be followed before any changes can be made to XM’s terrestrial repeater network, including adding any new repeater sites or making changes to existing repeaters. XM will submit a copy of the Repeater Change Guide to the Bureau by September 1, 2008. Pursuant to the Repeater Change Guide, any construction or other changes to XM’s repeater network must be approved in advance by the Senior Vice President, Ground Systems Engineering and the FCC Compliance Officer. Where the FCC Compliance Officer determines that FCC approval is needed before a change is made, no construction or modification may be made until such FCC approval is received, and pursuant to the direction of the Senior Vice President, Ground Systems Engineering and the FCC Compliance Officer. (e) Compliance Training. XM will establish an FCC Compliance Training Program for all current employees who engage in activities subject to FCC regulation. The training program will be developed and fully implemented no later than December 1, 2008. XM will conduct refresher training programs for relevant employees at least annually and will train relevant new employees within 90 days of their employment. 11. Voluntary Contribution. XM agrees that it will make a voluntary contribution to the United States Treasury in the amount of $17,394,375. The payment will be made within thirty (30) days after the Effective Date. The payment must be made by check or similar instrument, payable to the Order of the Federal Communications Commission. The payment must include the Account Number and FRN Number referenced in the caption to the Adopting Order. Payment by check or money order may be mailed to Federal Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000. Payment by overnight mail may be sent to U.S. Bank – Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101. Payment by wire transfer may be made to ABA Number 021030004, receiving bank TREAS/NYC, and account number 27000001. For payment by credit card, Federal Communications Commission FCC 08-177 6 an FCC Form 159 (Remittance Advice) must be submitted. When completing the FCC Form 159, enter the Account number in block number 23A (call sign/other ID), and enter the letters “FORF” in block number 24A (payment type code). XM will also send electronic notification on the date said payment is made to Kathy Berthot at Kathy.Berthot@fcc.gov. 12. Waivers. XM waives any and all rights it may have to seek administrative or judicial reconsideration, review, appeal or stay, or to otherwise challenge or contest the validity of this Consent Decree and the Order adopting this Consent Decree, provided the Commission issues an Order adopting the Consent Decree without change, addition, modification, or deletion. XM shall retain the right to challenge Commission interpretation of the Consent Decree or any terms contained herein. If either Party (or the United States on behalf of the Commission) brings a judicial action to enforce the terms of the Adopting Order, neither XM nor the Commission shall contest the validity of the Consent Decree or the Adopting Order, and XM shall waive any statutory right to a trial de novo. XM hereby agrees to waive any claims it may otherwise have under the Equal Access to Justice Act, 5 U.S.C. § 504 and 47 C.F.R. § 1.1501 et seq., relating to the matters addressed in this Consent Decree. 13. Radio Receivers. The Commission will allow operation of the Radio Receivers that have been sold or distributed on or before the Effective Date. With regard to these existing Radio Receivers, XM will undertake the following efforts: (a) With respect to potentially non-compliant Radio Receivers purchased by a consumer but activated after the Effective Date, XM will use reasonable efforts to identify such consumers, and shortly after such consumer contacts the company to activate such device, offer such consumer at no charge to the consumer the choice, as appropriate, of: (1) a ferrite package, with instructions for how to attach the ferrites to the consumer’s radio cables (including on the cables of radios that have been professionally installed); (2) a replacement cassette adaptor (for consumer whose vehicles have cassette players); or (3) a ferrite package and an installation kit with hardware to use in connection with a professional installation of the consumer’s Radio Receiver, along with a coupon redeemable at no charge to the consumer for professional installation. XM will deliver to such consumers one of the above referenced solutions and a written communication to explain the benefits to consumers. (b) Within seven (7) business days of the Effective Date, XM will commence sending notices to, and make substantial progress towards notifying, by U.S. or electronic mail, all XM subscribers with Radio Receivers as of the Effective Date. The notice will inform subscribers that the subscriber’s Radio Receiver may not be in compliance with FCC Rules and it may interfere with others’ FM radio reception. The notice will direct subscribers to a website or a toll-free customer service number for further information and to choose from among the following options. For each subscriber who uses a Radio Receiver in the wireless FM modulator mode or who uses a Radio Receiver that has been professionally installed, XM will send the subscriber at no cost to the subscriber his or her choice of either: (i) A ferrite package, with instructions for how to attach the ferrites to the subscriber’s radio cables (including on the cables of radios that have been professionally installed); (ii) A replacement cassette adaptor (for subscribers whose vehicles have cassette players); or (iii) For subscribers whose vehicles do not have cassette players, a ferrite package and an installation kit with hardware to use in connection with a professional Federal Communications Commission FCC 08-177 7 installation of the subscriber’s radio, along with a coupon redeemable at no charge to the consumer for professional installation. Each such notice, which will be substantially in the form included in Attachment A, will also contain a hyperlink or an address to a website maintained by XM that allows subscribers to search for open FM frequencies by zip code. Distribution to subscribers of these solutions will be effected based upon subscriber responses and will begin within five (5) business days following receipt by XM, or a third party retained by XM, of the solutions. (c) The website and toll-free customer service number will advise all subscribers using a Radio Receiver with a cassette adaptor in a vehicle or with an RCA cable in a fixed location that if there is a menu setting enabling the FM modulator to be turned “off,” it should be turned “off” when the cassette adaptor or RCA cable is attached. (d) XM will also provide such notice to subscribers via its website, subscriber newsletter and automated telephone response. (e) XM will cause all non-compliant Radio Receivers returned by consumers to XM for repair or warranty claims to be modified to be compliant with Section 302(b) of the Act and Parts 2 and 15 of the rules or replaced with compliant devices. (f) Within seven (7) business days of the Effective Date, XM will begin broadcasting an on-air notice regarding the Radio Receivers on a daily basis on high listenership news, talk and entertainment programming selected by XM. XM will continue such on-air notices for three months after the Effective Date. The Commission shall have the option of extending the on- air notice requirement for three additional months by notifying XM in writing of the need for such an extension one week prior to the termination of the initial three month period. The on- air notice shall contain in substantial form the information in Attachment B. 14. Marketing of Radio Receivers. XM agrees that every radio receiver that is marketed by XM in the United States on or after the Effective Date of this Consent Decree shall be designed to be compliant with Section 302(b) of the Act and Parts 2 and 15 of the Rules. 15. Compliance Reports. XM will file compliance certifications and reports with the Commission as follows: (a) Beginning on September 1, 2008, and continuing at three (3)-month intervals thereafter until the expiration of this Consent Decree, XM shall provide a report detailing: (i) to its knowledge, the total number of Radio Receivers that remain activated as of the most recent date on which that information is available to XM; (ii) the status of its compliance efforts set forth in paragraph 13 and a certification that XM has provided the notices required in paragraph 13(b); and (iii) any changes in the technical parameters at which its terrestrial repeaters are operating. (b) Each report shall include a compliance certificate from XM’s Senior Vice President, Ground Systems Engineering, as an agent of XM, stating that the officer has personal knowledge that XM has established and implemented operating procedures intended to ensure compliance with this Consent Decree, together with an accompanying statement explaining the basis for Federal Communications Commission FCC 08-177 8 the officer’s compliance certification. All compliance reports shall be submitted to the Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal Communications Commission, 445 12th Street, S.W., Washington, D.C. 20554. All reports shall also be submitted electronically to Kathy Berthot at Kathy.Berthot@fcc.gov. 16. Termination Date. Except with respect to paragraph 10(e), the requirements of this Consent Decree will expire five (5) years after the Effective Date. 17. Severability. The Parties agree that if any of the provisions of the Adopting Order or the Consent Decree shall be invalid or unenforceable, such invalidity or unenforceability shall not invalidate or render unenforceable the entire Adopting Order or Consent Decree, but rather the entire Adopting Order or Consent Decree shall be construed as if not containing the particular invalid or unenforceable provision or provisions, and the rights and obligations of the Parties shall be construed and enforced accordingly. In the event that this Consent Decree in its entirety is rendered invalid by any court of competent jurisdiction, it shall become null and void and may not be used in any manner in any legal proceeding. 18. Subsequent Rule or Order. The Parties agree that if any provision of the Consent Decree conflicts with any subsequent rule or Order adopted by the Commission (except an Order specifically intended to revise the terms of this Consent Decree to which XM does not expressly consent) that provision will be superseded by such Commission rule or Order. 19. Successors and Assigns. XM agrees that the provisions of this Consent Decree shall be binding on its successors, assigns, and transferees. 20. Final Settlement. The Parties agree and acknowledge that this Consent Decree shall constitute a final settlement between the Parties. The Parties further agree that this Consent Decree does not constitute either an adjudication on the merits or a factual or legal finding or determination regarding any compliance or noncompliance with the requirements of the Act or the Commission’s Rules and Orders, provided, however, that the Commission may consider the facts in this proceeding in any future proceeding involving violations by XM of the same rules at issue in this proceeding or involving misrepresentation or lack of candor by XM in its dealings with the Commission. The Parties agree that this Consent Decree is for settlement purposes only and that by agreeing to this Consent Decree, XM does not admit or deny noncompliance, violation or liability for violating the Act or Rules in connection with the matters that are the subject of this Consent Decree. 21. Modifications. This Consent Decree cannot be modified without the advance written consent of both Parties. 22. Paragraph Headings. The headings of the Paragraphs in this Consent Decree are inserted for convenience only and are not intended to affect the meaning or interpretation of this Consent Decree. 23. Authorized Representative. Each party represents and warrants to the other that it has full power and authority to enter into this Consent Decree. Federal Communications Commission FCC 08-177 9 24. Counterparts. This Consent Decree may be signed in any number of counterparts (including by facsimile), each of which, when executed and delivered, shall be an original, and all of which counterparts together shall constitute one and the same fully executed instrument. Marlene H. Dortch Secretary Federal Communications Commission Date Gary N. Parsons Chairman of the Board of Directors XM Radio, Inc. Date Federal Communications Commission FCC 08-177 10 ATTACHMENT A Draft Text of Customer Notice Dear XM Subscriber, The FCC has notified XM that some of our older receiver models (generally, those purchased before August, 2006) may not operate in the manner required by the FCC and may cause interference to FM radio users depending on how the XM radio is installed or used. The receiver models include the Roady2, SkyFi2, MyFi, Airware, Tao, RoadyXT, Xpress, Sportscaster, XR9-XCX9, Jensen JXR9, Inno, Helix, and Nexus. Please note this notice does not apply to you if your new car came installed with an XM receiver. If you do have one of the receivers mentioned above and use it with the wireless FM option or you have had the receiver professionally installed, then we have several options available at no cost to you to alleviate this possible interference. Please visit our website at www.#####.com or call us toll-free at ###- ###-#### to choose one of the following three options: Option A: We will send you ferrite beads to attach to your XM antenna and power adaptor cables. (Ferrite beads are typically placed on the end of data cables to reduce interference.) Option B: We will send you a replacement cassette adapter to use with your XM radio. Only choose this option if your car radio has a cassette player. Option C: For subscribers whose vehicles do not have cassette players, a ferrite package and an installation kit with hardware to use in connection with a professional installation of the subscriber’s radio, along with a coupon redeemable at no charge to the consumer for professional installation. Please visit the following website, www.######.com for more information and to select your option. If you do not have access to the Internet, you may call our toll-free automated telephone response system at ###-###-#### for information on how to alleviate this possible interference. Thank you for your attention to this matter. Best Regards, XM Management Federal Communications Commission FCC 08-177 11 ATTACHMENT B Draft Text of On-Air Announcement The FCC has notified XM that some of our older receiver models could cause interference to FM radio users. If you are currently using one of the affected models, you will receive an email or letter from XM with information to assist you in deciding whether your receiver needs changes and what changes you should make. Please visit our website www.#####.com or call us toll-free at ###-###-#### for further information. Please note that this notice does not apply to you if your new car came installed with an XM receiver. Thank you for your attention to this matter. Federal Communications Commission FCC 08-177 12 ATTACHMENT C No. Market Area Repeater ID 1 Akron AKR004A 2 Albuquerque ALQ004A 3 Atlanta ATL009A 4 Atlanta ATL046A 5 Atlanta ATL095A 6 Atlanta ATL003C 7 Buffalo BUF001A 8 Buffalo BUF003A 9 Buffalo BUF012A 10 Charlotte CHA007B 11 Charlotte CHA015B 12 Charlotte CHA021B 13 Charlotte CHA037A 14 Charlotte CHA009F 15 Charlotte CHA038B 16 Chicago CHI137B 17 Chicago CHI106B 18 Chicago CHI125A 19 Chicago CHI222A 20 Chicago CHI238A 21 Chicago CHI241D 22 Cincinnati CIN025C 23 Cincinnati CIN041B 24 Dallas DFW507B 25 Dayton DAY011B 26 Detroit DET005D 27 Detroit DET035A 28 Detroit DET037A 29 Detroit DET043A 30 Detroit DET030A 31 Greenville GRV027B 32 Harrisburg HAB008A 33 Hartford HAR035A 34 Houston HOU020A 35 Jacksonville JAC009A 36 Kansas City KAC022C 37 Los Angeles LAX645B 38 Los Angeles LAX011A 39 Los Angeles LAX020B 40 Los Angeles LAX108A 41 Los Angeles LAX144A 42 Los Angeles LAX024A 43 Los Angeles LAX103A 44 Los Angeles LAX117C 45 Los Angeles LAX116A 46 Miami MIA019B 47 Miami MIA022A 48 Minneapolis MIN027A Federal Communications Commission FCC 08-177 13 49 Minneapolis MIN030A 50 Nashville NAS508A 51 Nashville NAS001A 52 Nashville NAS038D 53 New Orleans NOX004A 54 New York NYC192C 55 New York NYC010A 56 Norfolk NOR003A 57 Orlando ORL005C 58 Pittsburgh PIT011C 59 Pittsburgh PIT033A 60 Pittsburgh PIT037B 61 Portland POR003B 62 Portland POR028A 63 Raleigh RAL009A 64 Raleigh RAL016C 65 Raleigh RAL017B 66 Raleigh RAL021B 67 Raleigh RAL029B 68 Raleigh RAL022A 69 Sacramento SAC006A 70 San Francisco SFX007A 71 San Francisco SFX716B 72 San Francisco SFX058A 73 San Francisco SFX064A 74 San Francisco SFX117A 75 San Francisco SFX214B 76 Seattle SEA007A 77 Seattle SEA012A 78 Seattle SEA016A 79 Seattle SEA021B 80 St. Louis STL009D 81 St. Louis STL001A 82 St. Louis STL020A 83 St. Louis STL023A 84 Tampa TAM015A 85 Tampa TAM003A 86 Tampa TAM008A 87 Tampa TAM009C 88 Tampa TAM001A 89 Tampa TAM002A 90 Tampa TAM013A 91 Tampa TAM014A 92 Washington DC WDC430A 93 Washington DC WDC232E 94 Washington DC WDC502A 95 Washington DC WDC220C 96 Washington DC WDC227E 97 Washington DC WDC501B 98 Washington DC WDC515A 99 Washington DC WDC519A 100 Washington DC WDC215B Federal Communications Commission FCC 08-177 14 ATTACHMENT D No. Market Area Repeater ID 1 Akron AKR002B 2 Albany ALB006D 3 Albany ALB013B 4 Atlanta ATL007A 5 Atlanta ATL010B 6 Atlanta ATL016C 7 Atlanta ATL024A 8 Atlanta ATL030B 9 Atlanta ATL043B 10 Atlanta ATL063A 11 Atlanta ATL064C 12 Atlanta ATL067A 13 Atlanta ATL068A 14 Atlanta ATL069A 15 Atlanta ATL110B 16 Atlanta ATL525A 17 Austin AUS003A 18 Birmingham BIR006A 19 Boston BOS101E 20 Boston BOS109B 21 Boston BOS122A 22 Boston BOS124A 23 Boston BOS125A 24 Boston BOS127A 25 Boston BOS128A 26 Boston BOS132A 27 Boston BOS134A 28 Boston BOS135A 29 Boston BOS202C 30 Boston BOS226A 31 Boston BOS232B 32 Buffalo BUF004A 33 Buffalo BUF006A 34 Chicago CHI115D 35 Chicago CHI116F 36 Chicago CHI118E 37 Chicago CHI121A 38 Chicago CHI123F 39 Chicago CHI133A 40 Chicago CHI134D 41 Chicago CHI136C 42 Chicago CHI140A 43 Chicago CHI142B 44 Chicago CHI201E 45 Chicago CHI213A 46 Chicago CHI225B 47 Chicago CHI250A 48 Chicago CHI251E 49 Chicago CHI255B Federal Communications Commission FCC 08-177 15 50 Chicago CHI604B 51 Cleveland CLE002A 52 Cleveland CLE005D 53 Cleveland CLE006A 54 Cleveland CLE027A 55 Columbus COL020F 56 Columbus COL501A 57 Dallas DFW011A 58 Dayton DAY013A 59 Detroit DET001A 60 Detroit DET008A 61 Detroit DET012A 62 Detroit DET014A 63 Detroit DET016A 64 Detroit DET029B 65 Detroit DET031C 66 Detroit DET034A 67 Detroit DET038A 68 Detroit DET040A 69 Detroit DET044A 70 Detroit DET047A 71 Detroit DET048A 72 Detroit DET515A 73 Detroit DET549A 74 Greensboro GRE003A 75 Greenville GRV005B 76 Harrisburg HAB014A 77 Hartford HAR040A 78 Indianapolis IND002C 79 Kansas City KAC025A 80 Kansas City KAC125A 81 Kansas City KAC225A 82 Knoxville KNO001A 83 Las Vegas LVX003A 84 Las Vegas LVX005A 85 Los Angeles LAX001B 86 Los Angeles LAX012C 87 Los Angeles LAX014A 88 Los Angeles LAX018A 89 Los Angeles LAX028B 90 Los Angeles LAX037B 91 Los Angeles LAX101B 92 Los Angeles LAX105A 93 Los Angeles LAX109A 94 Los Angeles LAX110A 95 Los Angeles LAX111A 96 Los Angeles LAX113B 97 Los Angeles LAX118C 98 Los Angeles LAX126A 99 Los Angeles LAX130A 100 Louisville LOU005A 101 Louisville LOU007B Federal Communications Commission FCC 08-177 16 102 Louisville LOU009B 103 Memphis MEM003A 104 Memphis MEM011B 105 Miami MIA003F 106 Miami MIA005A 107 Miami MIA007B 108 Miami MIA008A 109 Miami MIA009A 110 Miami MIA010A 111 Miami MIA029C 112 Miami MIA101E 113 Minneapolis MIN012A 114 Minneapolis MIN014B 115 Minneapolis MIN016D 116 Monterey MON008C 117 Nashville NAS009A 118 Nashville NAS017B 119 Nashville NAS020A 120 New York NYC003A 121 New York NYC004A 122 New York NYC008B 123 New York NYC009A 124 New York NYC012B 125 New York NYC017C 126 New York NYC019F 127 New York NYC020B 128 New York NYC027A 129 New York NYC028C 130 New York NYC031D 131 New York NYC035A 132 New York NYC046A 133 New York NYC053E 134 New York NYC055A 135 New York NYC058D 136 New York NYC070G 137 New York NYC132H 138 New York NYC136C 139 New York NYC141A 140 New York NYC161A 141 New York NYC172A 142 New York NYC193B 143 New York NYC195B 144 New York NYC196A 145 New York NYC200A 146 New York NYC205A 147 New York NYC214B 148 New York NYC222C 149 New York NYC611B 150 New York NYC614B 151 Oklahoma City OKC001B 152 Orlando ORL001C 153 Philadelphia PHI002A Federal Communications Commission FCC 08-177 17 154 Philadelphia PHI049A 155 Phoenix PHO006A 156 Phoenix PHO101A 157 Pittsburgh PIT002A 158 Pittsburgh PIT004D 159 Pittsburgh PIT019C 160 Pittsburgh PIT042B 161 Portland POR017B 162 Portland POR021A 163 Portland POR030A 164 Portland POR035A 165 Providence PRO001B 166 Raleigh RAL004A 167 Raleigh RAL007A 168 Raleigh RAL028A 169 Richmond RIC008A 170 Richmond RIC020A 171 Richmond RIC033A 172 Richmond RIC034A 173 Rochester ROC002A 174 Sacramento SAC001C 175 Salt Lake City SLC001A 176 Salt Lake City SLC004B 177 San Antonio SAN001A 178 San Diego SDX002B 179 San Diego SDX019C 180 San Francisco SFX005A 181 San Francisco SFX009C 182 San Francisco SFX139B 183 San Francisco SFX250A 184 Seattle SEA001B 185 Seattle SEA002A 186 Seattle SEA011A 187 Seattle SEA014A 188 Seattle SEA019C 189 Seattle SEA033B 190 Seattle SEA034A 191 Seattle SEA050A 192 Seattle SEA053A 193 Seattle SEA056A 194 Springfield SPR001A 195 Springfield SPR003B 196 St. Louis STL003A 197 St. Louis STL006A 198 St. Louis STL012C 199 St. Louis STL017E 200 Syracuse SYR004A 201 Syracuse SYR008F 202 Tampa TAM011A 203 Toledo TOL505A 204 Tulsa TUL001A 205 Washington DC WDC102E Federal Communications Commission FCC 08-177 18 206 Washington DC WDC105F 207 Washington DC WDC202A 208 Washington DC WDC203B 209 Washington DC WDC222A 210 Washington DC WDC223A 211 Washington DC WDC230A 212 Washington DC WDC307A 213 Washington DC WDC313B 214 Washington DC WDC314B 215 Washington DC WDC325A 216 Washington DC WDC329A 217 Washington DC WDC401B 218 Washington DC WDC405A 219 Washington DC WDC409A 220 Washington DC WDC500B 221 Washington DC WDC513A Federal Communications Commission FCC 08-177 19 STATEMENT OF CHAIRMAN KEVIN J. MARTIN Re: Sirius Satellite Radio Inc. Re: XM Radio, Inc. The Commission has longstanding technical rules regarding the marketing of equipment, including FM modulators, and the construction and operation of terrestrial repeaters pursuant to Special Temporary Authority. These rules serve important consumer protection and competitive goals. As I have said before, the Commission takes a licensee's obligation to comply with our rules very seriously and will not tolerate non-compliance. In order to resolve the Commission's investigation into whether these license holders were violating the Commission's technical requirements regarding FM modulators, as well as our rules regarding the construction and operation of terrestrial repeaters, the two companies have agreed to undertake significant corrective actions and implement various reforms to ensure future compliance with the Commission's rules. They also have agreed to make significant contributions to the U.S. Treasury totaling nearly $19.6 million. In reaching a conclusion to these investigations, the apparently intentional nature of some of the violations was troubling. Indeed, the ability and willingness to conform one's conduct to the requirements of the Commission's rules are central to the qualifications of any Commission licensee. On balance, however, the public's interest in the continued availability and viability of satellite radio services and the impact on the public and other licensees that the violations precipitated, taken together with the rigorous oversight and reporting obligations and substantial voluntary contribution, persuade me that settlement of these matters would best serve the public interest. Through this strong enforcement action that we take today, the Commission has provided clear guidance to the licensees that we expect them to conform their conduct to the Commission's rules and sends a strong message that we will not tolerate non-compliance. Federal Communications Commission FCC 08-177 20 STATEMENT OF COMMISSIONER JONATHAN S. ADELSTEIN Re: Sirius Satellite Radio Inc. Re: XM Radio, Inc. Today, we approve one of the largest voluntary contributions ever agreed upon by the Commission for violations of Commission rules. XM and Sirius have agreed to pay a total amount of $19.5 million for their intentional and repeated violations of rules intended to protect other licensees and the public. The brazen nature of these violations indeed warrants this substantial monetary contribution and rigorous oversight and reporting obligations. It is my hope that the Commission will vigorously enforce all elements of today’s Order and Consent Decree, but history suggests otherwise. In April and June 2006, the Commission launched an investigation into alleged noncompliant XM and Sirius satellite radio devices; and that fall, the Commission learned about widespread unauthorized use of terrestrial repeaters. XM, for example, had constructed and was operating 479 unauthorized or variant repeaters. In light of such unprecedented violations, it is stunning that the Commission was poised to approve the merger of XM and Sirius before resolving these enforcement matters. It is inconceivable to me that we would even consider approving such a merger with such a large and serious number of outstanding violations unresolved. That would have never crossed our minds if the transactions involved terrestrial broadcasters. I commend my colleague, Commissioner Tate, for insisting that we conclude enforcement action prior to concluding the merger transaction. In the same vein, I am discouraged that the Commission has not yet decided the interference issues between the SDARS and Wireless Communications Service (“WCS”) in the 2.3 GHz band. That these issues have been before the Commission for over a decade is completely unacceptable. This enforcement action implicates a number of transmitters that are now operating with special temporary authority (STAs). These STAs would no longer be necessary, and they could operate under regular authorization, if this matter were resolved. It should have been done before or concurrent with this enforcement matter, and certainly before the merger was approved. The longer we delay implementing rules governing the coexistence of SDARS and WCS, the longer we delay WCS rollout of critical wireless broadband services to rural, unserved and underserved areas. It is not enough to talk about rural broadband deployment. We need to do something about it. Here, we are in fact standing in the way. We need to act, and do so in a way which promotes broadband and protects listeners of satellite radio. Today, I urge my colleagues to determine final technical rules so that WCS licensees can manufacture compliant equipment and devices. Federal Communications Commission FCC 08-177 21 STATEMENT OF COMMISSIONER DEBORAH TAYLOR TATE Re: XM Radio, Inc. Beginning in 1927 with its predecessor, one of the core purposes for the Federal Communications Commission was to ensure that licensees operate in accordance with technical specifications of their license. Adherence to Commission authorizations ensures that all spectrum licensees can make efficient use of the bandwidth they have been allocated. That is why I felt it imperative to resolve these outstanding enforcement issues before moving to consideration of this merger. The licensee that is the subject of today’s voluntary forfeiture and consent decree failed to comply—knowingly and repeatedly, at the highest levels of management—with the specifications for its FM modulators and the terms of its Special Temporary Authorizations (“STAs”) for more than five years. I believe the Consent Decree we adopt today reflects the gravity of the violations, and the seriousness with which I view them. XM has agreed to a voluntary contribution of $17,394,375 for operating terrestrial repeaters at variance from their specification, and authorizing non-compliant FM modulators. In addition, XM has entered into a consent decree that mandates strict compliance with certifications, reporting requirements, and penalties associated with future violations. Specifically, XM has agreed to the following: ? A Compliance Plan to remain in effect for five (5) years, requiring reporting every three (3) months; almost twice the FCC’s customary compliance plan period. · Hire FCC Compliance Officer responsible for ensuring future compliance with Act and Commission rules; · Adopt Procedural Guide establishing procedures for testing, certifying and making modifications to satellite radio receivers and Repeater Change Guide establishing procedures for making any changes to terrestrial repeater network; · Conduct audits of randomly selected satellite radio receivers to ensure compliance; · Establish an FCC Compliance Training Program for all employees who engage in activities subject to FCC regulation; · Provide notices to subscribers offering various technical fixes to non-compliant radio receivers at no cost to subscriber via its website, subscriber newsletter and automated telephone response; · Broadcast on-air notices to subscribers regarding non-compliant radio receivers; · Replace non-compliant radio receivers returned by consumers for repair or warranty claims with compliant devices; and · Submit periodic compliance reports to FCC. With regard to terrestrial repeaters, within 60 days XM will shut down or bring into compliance 100 of its repeaters. All others will be referred to the FCC’s International Bureau for processing. Administration of effective spectrum policy requires that licensees comply with Commission rules and that the Commission is vigilant in its oversight. This will foster a level playing field for competition and encourage technological innovation. The American public requires and deserves no less.