Is Sirius XM's Rate Increase Legal?
July 27, 2009 at 5:18 AM (PT)
SIRIUS XM is set to raise prices this week, claiming the increase is caused by a jump in music-royalty fees, reports THE COLUMBUS DISPATCH. However, there are subscribers who question whether the price hike is based on the royalty fee -- or is simply a way around an FCC ruling, and they are complaining loudly to the FCC.
SIRIUS XM wrote to subscribers, saying, "A U.S. Music Royalty Fee of $1.98 per month for primary subscriptions and 97 cents per month for multi-receiver subscriptions will be effective upon your next renewal. This fee will be used directly to offset increased payments from XM to the recording industry."
In 2008, when SIRIUS and XM merged, the company told the FCC that it would cap its basic subscription package at $12.95 a month. The lone exception -- they could pass along some costs associated with music royalties.
The DISPATCH article writes that on "MARCH 20, 2007, the royalty rate was 6% of the subscription fee. The rate will increase to 6.5% on WEDNESDAY, an 8.3% jump. SIRIUS XM's $1.98 bump in the basic monthly subscription rate of $12.95 represents a 15% rise -- far more than the 8% the FCC approved in its ruling."