Business model components

Connected Activities

In order to ensure efficient communication SDARS has to connect three important components; the communication satellite, the uplinks and the downlinks that enable easy transmission. The communication satellites provides three orbits each covering an estimated distance from above the earth into the space and this ensures that signals are distributed evenly.

Low orbit covers below 3100 miles above the earth, medium orbits below 12,400 miles and geostationary covering 22,237 miles. Through the use of earth-orbiting satellite the SDARS have ensured that the radio signals are received promptly by the subscribers (Callahan et al 305-306).

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SDARS have also installed terrestrial repeaters that ensure that the transmission signals are not disrupted by obstacles. The system also has attenuated free frequency range that prevents transmission interference by the weather. The firm offers an in-dash unit that has the ability of receiving AM, FM and also satellite transmissions.

There is the FM modulator capable of receiving and retransmitting signals, and the portable plug-and-play devices which offer the subscribers convenience since it can be used in cars (Callahan et al 306).


The rise in the radio technology has seen ascend to the levels of offering commercial applications. The quality and the distance of transmission coverage also improved and incorporated the human voices; this ensured that a good percentage of population is reached from every region (Callahan et al 305). The vehicle industry has become one of the major customers for the satellite radio, all new vehicles scramble for installation and the radio prices are usually not considered in pricing the new vehicles (Callahan et al 305).

The SDARS provides subscribers with variety of unique channels with less time apportioned to the commercial coverage as compared to the traditional commercial coverage that took approximately fifteen minutes per programming hour. The signal coverage is widespread therefore offering subscribers the ability to listen to same station on long journeys (Callahan et al 306).

There is the hardware subsidies offered by SDARS in order to offset equipment costs. There are also incentives that are offered to the dealers that enhances the retail sales. The service has of recent offered the XM satellite radio that produces a signal from two earth-station antennas. They offer variety of music, talk, sports, entertainment and news channels. Besides they provide the subscribers with the opportunity to listen to live artist performances (Callahan et al 308).

Revenue Source

To ensure stability and continuation SDARS obtains its revenue from advertising, activation fees and subscription fees. The contribution by the XM was approximated to be between 20-25% of the total revenue. The company charges an activation fee of $9.99 that’s only for subscriptions ordered over the website.

The activation fee for orders made over the phone is a bit higher rated at $ 14.99, the total activation fee was estimated to contribute between 3- 5% of total revenues. The monthly subscription fee for XM which forms a big percentage of the revenues is charged at $9.99 per month. The subscription fee has contributed between 79-88% of total revenues (Callahan et al 309).

Also the addition of other channels like the premium adult channel and playboy radio saw the increase in the subscription fee in the recent past. In Sirius satellite radio 98% of the revenue is obtained from the subscription fee with less than 2% from advertising. This is since music programming commercials are free of charge (Callahan et al 310).

For the enhancement of their transmissions SDARS provide the consumers with the tuners each valued between $250 – $400, antenna valued between $50- $100 and also there is a fee paid to cater for the installation services that’s between $60 – $100.

Some revenue is received from the partnering companies like the GM which helps in the distribution process of the XM radios (Callahan et al 309). On the other hand The Hertz Corporation which is a car rental Company partners with Sirius satellite radio to provide radios in Ford vehicles which costs tenants an extra charge of $ 5 per day (Callahan et al 310; Feng et al 467-503).

Work Cited

Callahan, Cropper, Hunter, Kucker and Mitzel Angela. “Satellite Digital Audio Radio Service”. Accessed at on March 2, 2010.

Feng, Froud, Johal, Haslam and Williams. “A New Business Model? The Capital Market and the New Economy”. Economy and Society, Vol. 30, No. 4, 2001: 467-503


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