Satellite radio operator Sirius Satellite Radio said Monday it has developed a new technology that will initially increase its network capacity by about 25 percent, which analysts say may speed its ability to offer services like video in cars.
The technology, known as hierarchical modulation, will allow Sirius to offer additional audio channels, as well as advanced services such as data and video over Sirius' current network, without affecting the quality of its broadcasts, it said in a statement.
Sirius, No. 2 to XM Satellite Radio Holdings in the emerging pay-radio market, said it expected to offer services with the new technology beginning in the second half of 2006. Sirius shares rose 5.3 percent to $5.95 in active Monday trade on the New York Stock Exchange.
A spokesman for XM said that the company is also working on technology that allows for multiple streams of data to be broadcast at the same time over a single channel.
Music, sports and talk programming are the primary features of both XM and Sirius's satellite services, with Sirius at 120 channels and XM at about 150. Additional streams of data could help both companies beef up their premium offerings of navigation and instant-traffic information for their subscribers in cars.
Moreover, the technology may speed the use of video broadcast to cars. Sirius plans to offer several children's video channels to cars in 2006. XM has said it is capable of also broadcasting video, but is mulling the viability of such a business.
Hoefer & Arnett analyst April Horace said that with key technological hurdles cleared, video may help spur the introduction of more automobiles by partners DaimlerChrysler and Ford Motor Co. with built-in Sirius Satellite systems.
"Sirius has previously demonstrated the ability to provide video but didn't have the channel capacity or the chipset," she said. "(Video) may also help move Chrysler and Ford to get more bullish on Sirius in order for them to distinguish themselves in the SUV (sport utility vehicle) wars.
