Alltel to offer XM on cell phones
Twenty XM Satellite Radio channels will soon be available on Alltel Wireless phones.
NEW YORK (CNNMoney.com) -- Wireless telephone company Alltel and XM Satellite Radio announced a deal Thursday that allows Alltel's 11 million customers to listen to XM Satellite radio on their cell phones.
The deal adds a new twist to the intense competition in both the wireless and satellite radio markets.
The XM-Alltel service will cost $7.99 a month and give customers the choice of 20 different genres of commercial free music. Song title, artist and album title will be visible on the phone as the music plays.
Chance Patterson, XM's vice president for corporate affairs, said the deal should help boost XM's sales and raise awareness of its product. XM (Charts) currently has 7 million subscribers but the ability to keep adding more is seen as a key issue for the company.
For Alltel (Charts), the nation's fifth largest wireless phone company, it's a matter of expanding its content offerings since the communications industry is rapidly becoming more about mobile entertainment.
Kevin Beebe, president of wireless operations for Alltel, said his company is responding to customers' demands for services like music and video on their phones.
But competition will be tough. Many cell phone owners already have iPods for their music needs.
XM's Patterson said iPods and other portable music players are "not a threat" though since there are consumers who subscribe to satellite radio and also own such devices.
But other wireless companies are increasingly viewing digital music as a way to attract new customers. To that end, Sprint (Charts) signed a deal last year with Sirius to have some Sirius stations streamed over Sprint phones. (Sprint has since merged with wireless carrier Nextel.)
Verizon Wireless recently announced that it would soon begin selling a phone from LG called Chocolate, which will hold as many as 1,000 songs. Verizon Wireless is a joint venture of Verizon (Charts) and Vodafone (Charts).
And Finnish cell phone maker Nokia (Charts), which sells phones to Alltel as well as Alltel competitors like Verizon and Cingular, announced a deal Tuesday to buy digital music distributor Loudeye Corp. for about $60 million.
What's more, Alltel already offers streaming, commercial free radio through its in-house brand Axcess. The XM service will cost a dollar more per month than Axcess Radio but Wade McGill, Alltel's vice president of wireless product management, thinks the premium price is worth it since the XM name will attract more subscribers.
"Consumers are going with brands they know and trust," he said.
But not everyone is convinced of the wisdom of such add-on deals.
Phil Leigh, senior analyst with Inside Digital Media, an independent research firm, doesn't think the alliance with XM will be very successful. He thinks consumers may be reluctant to pay an extra monthly fee just to have satellite radio on their phone.