Sirius' new portable satellite radio, the Stiletto 10, is showcased at the Consumer Electronics Show in Las Vegas on Wednesday, Jan. 10, 2007. (Jae C. Hong/Associated Press)

It was hailed as the greatest improvement to radio since the advent of the FM band - but satellite radio hasn't been an easy business for its pioneers.

Satellite radio is also known as subscription radio or pay-radio because it isn't always delivered by satellite. Providers sometimes use terrestrial repeater networks to broadcast or boost the signal.

The signal itself is always digital and offers listeners crystal-clear, near-CD quality music, 24 hours a day. And it's mostly commercial free.

Subscription radio made its North American debut in the United States more than four years ago and by December 2005, two competing services - Sirius Canada and Canadian Satellite Radio/XM Radio Canada - were on the air.

The rival services had trouble establishing a subscriber base as quickly as they had initially predicted. XM's U.S. head office said it had 7.63 million subscribers at the end of 2006, falling short of its latest forecast of up to 7.9 million. Late in 2005, XM had predicted it would have nine million subscribers by the end of 2006. Smaller competitor Sirius Satellite Radio Inc. said in January that it ended the previous year with more than six million subscribers. Sirius has over 300,000 Canadian subscribers, while XM has 147,000. But neither company had yet turned an annual profit.

On Feb. 19, XM and Sirius announced they would merge into one company with a combined value of $13 billion US.

How is digital pay-radio different from regular radio?

Regular radio is transmitted through either the AM (amplitude modulation) or FM (frequency modulation) band. AM stations can broadcast their signal a fair distance, especially at night. It's not unusual to pick up AM stations hundreds of kilometres away on a clear night. The problem with the AM band is the quality of the signal is not as good as FM.

FM radio was developed to improve signal quality, so it offers rich stereo sound - but the signal doesn't travel far.

With satellite - or digital - radio, you get near-CD-quality sound. A compatible car radio, handheld unit or home stereo receiver can pick up the signal the same way your TV can pick up digital television channels. In addition, a satellite radio channel can carry extra information; while a song is playing, you can find out when the performer will be on tour in your area, for example.

Satellite radio content ranges from commercial-free music to talk shows, and current and "classic" recorded sports events.

Is my radio ready for digital pay-radio signals?

It's as ready as your television is, which is not very. Just like your TV, you need a special receiver to pick up the signals.

Delphi's new portable XM radio with built-in MP3 player SKYfi3 is shown at the Consumer Electronics Show in Las Vegas on Tuesday, Jan. 9, 2007. (Jae C. Hong/Associated Press)

The receiver can either be a small device that hooks up to a home stereo or boom box, or it can be a dedicated radio that can be installed in your car or a handheld personal unit about the size of an Apple Inc. iPod.

Receivers cost up to $300, depending on the make, installation costs and optional audio enhancement extras. On top of the cost of the receiver, you'll have to pay a monthly subscription fee.

Which pay-radio proposals were approved by the CRTC?

There are three of them. Two are partnerships with American satellite radio providers and the third is an all-Canadian proposal.

• Sirius Radio Canada, a partnership involving the CBC, Standard Radio Inc. and the U.S. firm Sirius Satellite Radio Inc. The service has more than 130 channels, including commercial-free music stations, news and information channels, and a variety of other talk, entertainment, sports and specialty channels.
• Canadian Satellite Radio Inc./XM Radio Canada, headed by Toronto businessman John Bitove, in partnership with XM Satellite Radio Holdings Inc. CSR/XM offers more than 140 channels in programming categories that include music, news, talk, sports, comedy and a children's channel.
• CHUM Subscription Radio Canada had proposed 50 channels in its CRTC application, all of which would be produced in Canada. They included 40 channels of English music and spoken-word material, five channels of French music and spoken-word material, and five diversity channels. The other difference between the CHUM proposal and the other two services was that CHUM plans to send its signal through land-based transmitters that would only cover big cities at first. While the CRTC opted to approve all three proposals, CHUM and a number of cultural groups that were not happy with the minimum conditions the CRTC imposed on the two satellite offerings. CHUM said it would be "unrealistic" to expect that its pay-radio service (which would be 100 per cent Canadian according to their proposal) could compete with Sirius Canada and CSR/XM's undertakings, which can draw much of their content from the U.S. CHUM's satellite radio channel has yet to go live.

How it works

Satellite radio depends heavily on something called "line-of-sight." In other words, the satellite needs a clear view - or at least mostly clear view - of the receiving mechanism on Earth in order to reach it. Severe weather, dense forest canopies and concrete buildings or overpasses can affect the signal

Both Sirius and XM use multiple satellites to increase the size of the blanketed area, but where the companies differ is in the orbit of those satellites.

XM's satellites are engaged in a geostationary orbit directly above the equator. This type of orbit keeps the satellites in a fixed place in the sky, which means that signal reception is extremely predictable. If a car radio can pick up the transmission while parked beside an office tower, it should also be able to receive the signal in that position every day at any time. However, the signal comes in on a relatively flat plane relative to the surface of North America, meaning a greater likelihood of interference.

Sirius's satellites, on the other hand, have been deployed in what's called an "elliptical geosynchronous" orbit, which means they move in a rough figure eight pattern over North, Central and South America. At any given time, there are at least two Sirius satellites hovering above North America, while the third goes silent and conserves power as it makes a round trip over South America.

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