15/02/2011 By http://seekingalpha.com ( Source: http://seekingalpha.com )

Patents Shed Light on Future of Satellite and Internet Radio

Is a Pandora-like service coming to Sirius XM (SIRI) this year? Just what will Sirius XM 2.0 bring? Well, some relatively recent patent developments have shed some light on the future of both satellite radio and internet radio. Several days ago, a patent was written about that shed some light on a possible path for Verizon (VZ) cell phone users as well as Sirius XM satellite radio subscribers. The patent details can be viewed here and the patent is entitled - a system for and method of receiving internet radio broadcast via satellite radio.

The patent was filed in July 2009 and was recently approved in January of 2011. In the patent, a system for transmitting customized user content and method of receiving internet radio broadcast via satellite radio is presented. The system and method allow internet radio to be delivered to consumers on a mobile electronic device. Internet radio can be individually customized to deliver certain types of content and can also deliver on-demand content. The system and method therefore provides for the delivery of customizable on demand content to a consumer’s mobile device with the stable and wide-ranging connectivity of satellite radio. This will in effect enable customized listening of internet radio playlists by anyone who subscribes to satellite radio and has a customized internet music playlist associated with their internet IP.

There are diagrams which go along with the patent showing the basic schematic of how the system would operate. The patent assignee is Verizon Patent and licensing inc. whose address is listed as Basking Ridge, New Jersey. However, the correspondence address for Verizon in relation to this patent is VERIZON; PATENT MANAGEMENT GROUP 1320 North Court House Road, 9th Floor ARLINGTON VA 22201-2909. The patent details how to accomplish this for users with both L band satellite radio, such as Worldspace was in Europe, as well as S band satellite radio like Sirius XM. In a nutshell, the patent poses the following:

Satellite radio service provider 130 may be communicatively coupled with a network 135. Network 135 may be a wireless network, a wired network or any combination of wireless network and wired network. For example, network 135 may include one or more of a fiber optics network, a passive optical network, a cable network, an Internet network, a satellite network (e.g., operating in Band C, Band Ku or Band Ka), a wireless LAN, a Global System for Mobile Communication (“GSM”), a Personal Communication Service (“PCS”), a Personal Area Network (“PAN”), D-AMPS, Wi-Fi, Fixed Wireless Data, IEEE 802.11a, 802.11b, 802.15.1, 802.11n and 802.11g or any other wired or wireless network for transmitting and/or receiving a data signal. In addition, network 135 may include, without limitation, telephone line, fiber optics, EE Ethernet 802.3, a wide area network (“WAN”), a local area network (“LAN”), or a global network such as the Internet. Also, network 135 may support, an Internet network, a wireless communication network, a cellular network, or the like, or any combination thereof.

In exemplary embodiments, the customized content selected by a user–e.g., an internet radio station or a playlist of user-selected audio content–may be transmitted to a user’s satellite receiver on a channel other than the 221 audio channels that may come with the satellite radio service. Because bandwidth is limited, it is possible that the customized content of different users could be transmitted over the same frequency channel.

Kind of funny how Sirius XM satellite radio and its supposed antiquated technology is still the envy of many out there. Another patent which belongs to the now fully merged Sirius XM radio, but was filed on behalf of XM in 2007 and approved in October 2010, can be seen here.

This patent provides for generating a remapped audio stream at digital audio broadcast radios from a first audio stream using content insertion to allow tiered subscription services. A remapped audio stream is rebranded by extracting segments from the first audio stream relating to channel identification segments and disk jockey talking segments and replacing them with stored audio items (e.g., commercials, different channel identification segments and different disk jockey talking segments).

Stored audio items for insertion are broadcast to the radios with messages for controlling the scheduling of insertion at the radios, and the storage and deletion of these audio segments at the radios. Stored audio items and messages can be sent using a different, localized broadcast system from that used to transmit the source audio stream to permit market-specific commercial insertion. Group file format for delivery permits intermittently used radios to receive the stored audio items and messages. The significance of which is explained in eye opening detail below.

The invention relates to a system and method of remapping and/or rebranding an audio broadcast channel using over-the-air messaging to insert audio segments stored at a receiver into a received live or buffered audio stream. More particularly, the present invention relates to a method of mapping a virtual channel from an existing channel by inserting stored audio segments into a live or buffered audio stream in place of selected existing segments to create a remapped channel having similar programming to the existing channel but different amount or type of advertising, or a rebranded audio channel having similar programming to the existing channel but different broadcast station identification and/or disk jockey announcements and/or advertising.

It then goes on to explain further that:

A number of providers of broadcast content (e.g., Satellite Digital Audio Service (SDARS) provider XM Satellite Radio Inc.) offer subscription services such as a monthly fee for reception of broadcast content that is primarily commercial free. Some users, however, may find the monthly fee amount to be cost prohibitive, but would consider paying for a broadcast service having a higher percentage of commercial content but a lower subscription fee.

When you put these two patents together with comments from recent media events and the last two conference calls by Sirius XM management regarding satellite 2.0, it seems pretty apparent what direction satellite technology and its revenue generation streams are headed. Imagine pay per listen sporting events and concerts as part of the mix as well. While there are literally many possibilities, these two patents seem destined for execution in some form as they are pretty solid in their plans.

The recent press release from Teleca only seems to bolster the case for both as it clearly states the following:

The platform we have developed for Sirius XM is an excellent example of Teleca’s ability to seamlessly integrate a customers IP into a dynamic Android operating system. Most importantly the reference application allows Sirius XM and third party developers to quickly build out new products and thereby retain their competitive advantage.

Teleca will be demonstrating the platform at the Mobile World Congress in Barcelona February 14th through 17th.

There are other hints of just what Sirius XM 2.0 will bring, and this patent seems to enforce comments made by Mel Karmazin in 2010 when talking about Sirius XM 2.0. He compared it to a cable box. He mentioned how cable tv was limited until the user could interact with the souce of the media. He talked about how cable companies evolved into offering so many other services. He also mentioned how it would be personalized radio. He hinted that this would be a big step forward in what Sirius XM can offer and what they are capable of. These above patents paint an interesting picture of possibilities.

In closing, one can see where the near term bullishness as well as the long term bullishness for Sirius XM the company and the stock has come from. One could also reason that Liberty Media (LCAPA) had a pretty good clue as to what the future held for satellite radio when it teamed up with the company back in 2009 during the bankruptcy scare.

Sirius XM, which was left for dead with its shares trading as low as .05 cents a share just 2 years ago, is now entering a period of recovery and innovation that has seen both the view of the company improve and the share price begin to recover to pre merger level value as the equity now sits at $1.84 as of close on the NASDAQ stock exchange this past Friday, February 11th. One can only wonder what it is the future holds as we await developments regarding Sirius XM 2.0 and they begin to unfurl.