Vegas Buzz

Photo: Henry Cook, Truck Applications Advisor, at Truck Show 2004 Las Vegas

CN: I know XM Radio's been around for a while now.  I once worked for an Internet broadcasting company.  One of our broadcasters, Jay Michaels interviewed your president -- Hugh Panero.  This was back in 1999, prior to its immensely successful launch.  What's your role?

XM:  (Henry Cook) : I am XM's truck applications advisor.   My work involves helping the drivers make the antennas work on the various types of trucks.

CN: How many channels are available for them now?

XM:  121 plus one premium channel.

CN:  What channels are the truckers most interested in?

XM:  We have several.  We have one aimed especially for truckers.  We call it Open Road, and it has all of the three top country and DJ special interest type channels -- Stories -- Radio personalities of the past 30 years.  We also have a channel of Books on Tape.  We also have a channel of the old time radio shows which is very popular with all the drivers.  We have traffic and weather channels. -- Life saver of course in heavy traffic. A lot of the drivers really like the old-time country music which is very hard to find on local radio and the advantage is you can keep it on and never lose the station.

CN: You can hear it from anywhere?

XM:  Miami to Seattle.  You can hear the same station all the time with a rare blank if you're going through a tunnel somewhere.

CN: Wasn't that difficult to do in the beginning? Being that you've got two moving objects, or, one stationary and the other moving?

XM:   Our satellites are stationary, more or less, in geo-synchronous orbit.  So between the two of them they blanket the continent, with our signal.

No. There were five of us in trucks.   I've been a driver most of my life, and I was one of the drivers in five of their test trucks.  July and August of 2001, we did the test to make sure that there were no dead zones.  We went back in forth in one set pattern, such as up and down the West Coast.

I live in Wyoming, and we went all across the country making sure there were no actual dead zones.

The only time you lose our signal again is in a tunnel, or certain rare instances where you're right up against a rock-faced  cliff  blocking the satellite for a minute or two until you top the hill or something like that.  That's why it's so reliable.

CN: That's incredible.  So you were actually the first ones to prove out the system?

XM:  We were.

CN:  That must have been a lot of fun.

XM:  It was.  And that's how I came to this job.  XM needed someone who had a background in trucking, knew the mechanics of trucks, to be able to really help people understand the how to make the systems work ... the antennas especially... the antennas are critical on trucks because you have so many different types of profiles.  Flatbeds and reefers, and all kinds of different trailers.  You know, knowing how to make them work so you're not blocked by equipment.

CN:  Or the electronics of the equipment?

XM: Yes.

CN:  Imagine that's a whole science in itself?

XM:  Yes, and we're still at it.

CN:  You must be one of the few people that knows anything about it...

XM:  There are a lot of us now. It's a learning curve. People catch up pretty quickly to technology nowadays.

CN:   Now this is also available for cars, right?  I know there are a lot of different cars with the same kinds of problems?

XM:   Absolutely.  And many truck drivers are surprised to find that a low percentage of our subscriber base is trucks.  And that low percentage is trucks only because there are so many more cars than trucks.

General Motors announced on February 1^st that they'd shipped a million cars, trucks and pick-ups, SUVs, with our radios installed, from the factory.  Honda will do a lot of them this year, GM will do some more. There are only three million of them that are (in) their trucks.  So within a few more years there will be many more cars and trucks on the road with our radios.

CN:  Never would have thought that.

XM:  And many people in trucking are surprised, but it's just the sheer number.

CN:  So in the lesser number of trucks, how many have your radios?

XM:  We have great exposure and penetration in the market. Everyone knows our system well.

CN:  I want one.

XM:  A lot of people think some things have got to be free and radio's one of them.  You hear ads on local radio, and we're trying to protect their market...

CN:  You're always paying for something.

XM:  You're paying whether it's radio or TV.  Forty-percent of the cost of a box of soap for your washing machine is advertising.  And they get their share on radio.  It's either an ad for one brand of soap or another.  You're paying a nickel for advertising out of what you pay for that bar of soap.

CN:  Personally, I'd rather pay not to hear it.

XM:  And you're not hearing the commercials.  We have no commercials on our music stations.  On our news and talk stations you'll hear some advertising on Fox or CNN, because we're buying our news feeds from them.  But on music, we do the programming so we can remove the commercials.   We can give you digital quality sound just like playing a CD.

CN:  Is it easy to install?

XM:  We have units that can be permanently installed like a stereo.  Most people don't do that, most people add a portable unit.  With the truck drivers it's very popular to have a portable unit that you can take out of your truck.  If you get home for a weekend, and you and the family are going to the beach or the mountains camping, you can take one of our portable units that will allow you to do that in 30 seconds.

CN:  Use it with an RV or SUV? ...

XM:  This unit will work with anything that has a radio.

CN:    So how many models do you have? Quite a few?

XM:   There are a lot.   You can tailor the kind of radio or receiver you put in your home.  Or you can take a portable unit to the beach.  You can tailor the receiver by the way you intend to use it.  Some people get a new GM or Honda (with XM radio installed) and they say 'Gee I can get a portable unit and take it to the beach.'  Sometimes we'll sell a second or third unit to a family just that way.   

A lot of the drivers have these units in their trucks,  and their wife is on vacation during the summer and uses it in her car, and by the end of the week they've decided to get another one.

CN:  Give me my XM!?

XM:  Sure.  We have family plans where when you add an additional unit, the one for your wife or your son in college -- I have four because my kids are in college --

CN:  It gets cheaper per unit?

XM: Right. And a lower price per unit for the additional units.

CN: So what do you think is the single most wonderful thing about XM?  What's the essence of it?

XM:  It's really two things.  The first thing is the quality and the reliability of the signal. - 24 hours around the clock.  And the second thing is the variety.  And again, most of us in trucking haven't really thought that way, but because most of the people in cars or home units are using it and there is a larger population (than trucks),  people have to rethink radio in that you're no longer limited by where you are.

If you're a fellow in Dodge City, Kansas that likes jazz, there are no jazz stations within 500 miles of Dodge City, Kansas.  And we have seven of them.  So, everything is now available for everyone, everywhere.   It's not just for people on the road.

A little old lady in Nevada who lives on a rural ranch...

CN:  You can't get anything...

XM:  Right.  And can't see well enough to drive to town or watch TV well enough to enjoy it, we have the 40's big band music when she was a girl, we have the old time radio shows -- The Shadow, The Lone Ranger, she listened to.  Someone who can't see well... it could change their lives.  Something of interest -- The News... Those markets will come along now that we're out for just about three years now.  And people are now hearing about us and seeing that we're going to be a growing concern.

New technology takes a little bit of time... We're growing faster than say new CD players or anything.

CN:  It's really ironic.  Given all the initial resistance to it by the capital markets, and places like that.

XM:  It's the same as any new technology.  Cable TV... Who's gonna pay for that?  And radio because there's so many more stations.   There was a little more initial mental resistance to that.

CN:  And as you said earlier, perhaps the notion in people's minds that 'radio is free.'

XM:  A lot of people don't realize that they are supporting it whether they write a check out every month or not.  And that's a hurdle to overcome.  But what you're paying for is the reliability.  To be able to go from Seattle to Miami and listen to your old time blues channel all the way.   -- Without any interruption.

And the other thing is to be able to select -- For instance I believe -- from memory -- we have 13 Rock and Roll channels.

CN:  There are many genres in Rock and Roll....

XM:  Exactly.  And so now you can specify in a lot of different ways and narrow your  focus.  You can't do that on the Top 40 AM stations.

CN:  That's like 'one size fits all.'

XM:  Here you can tailor and select just what you want.

CN:  How do you see this evolving in the future? Has it gotten as far as it's going to go?  Or do you see people stuffing XM receivers in backpacks, and the like?

XM:  Absolutely.  We have units you can take to the beach right now, or camping or fishing.  Later this year we will have new generations of different types of receivers that will be more portable and more easily used in smaller...

CN:  Will it be like an i-Pod?  Small, portable?

XM:  We will have things like that later this year.

CN:   You'll be able to have XM any way you want...

XM:   The total potential market has been estimated varyingly between 40 and 60 million subscribers.  We are confident we will maintain our market share and that we will grow.

CN:   Is that 40 to 60 million subscribers now?

XM:  That's the potential market.  We will in a few days surpass two million subscribers.  Our estimates for Wall Street have been that we will reach three million subscribers by year's end and we are on track to accomplish that.

We will have two million within a few days.   

And in that sense, we are the clear market leader.   CN

About XM Satellite Radio

XM is America's #1 satellite radio service with more than 2.1 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City and Nashville, Tennessee at the Country Music Hall of Fame, XM's 2004 lineup includes more than 120 digital channels of choice from coast to coast: 68 one-hundred-percent commercial-free music channels, featuring hip hop to opera, classical to country, bluegrass to blues; 34 channels of premier sports, talk, comedy, children's and entertainment programming; and 21 channels of the most advanced traffic and weather information for major metropolitan areas nationwide.

Affordable, compact and stylish XM satellite radio receivers for the home, the car, the computer and boom boxes for "on the go" are available from retailers nationwide. In addition, XM is available in more than 80 different 2004 car models. XM is a popular factory-installed option on more than 40 new General Motors models, as well as a standard feature on several top-selling Honda and Acura models. JetBlue Airways and AirTran Airways passengers will be able to listen to XM's programming in-flight later in 2004. This fall, XM will offer XM NavTraffic, a new service that will provide real-time traffic information for vehicle navigation systems. For more information about XM, visit http://www.xmradio.com.