Satellite radio uses digital signals to broadcast music, sports and talk programming to subscribers using specially designed receivers. The service is subscription-based, and the companies that provide it earn revenues by charging users monthly or yearly fees. In addition to audio, satellite broadcasters also transmit text information like stock quotes and weather forecasts, and they offer coast-to-coast coverage.
The roots of satellite radio date back to 1990, when ex-NASA engineer Robert Briskman and several former employees at Geostar, a satellite messaging company, formed a firm called Satellite CD Radio in Washington, DC. They used technology that could transmit digital radio signals over a wide range of frequencies. The firm tapped venture capitalist David Margolese to help secure funding. Margolese previously founded a pager company and helped launch Canada’s largest cellular telephone company.
CD Radio raised more than $1 million in an initial public offering of stock and purchased a license from the Federal Communications Commission to broadcast digital radio. It then renamed itself Sirius Satellite Radio, after the brightest star in the night sky, and moved into a new headquarters in Manhattan, where it set up studios for music and broadcasting. It also signed a deal with Loral Corp. to build two satellites for the network.
The satellites are positioned in a geostationary orbit, meaning that they appear to remain fixed above Earth, from an observer on the ground. These satellites can relay a radio signal across the contiguous United States and into Alaska, and they can also reach parts of Canada. Only satellite radio receivers can decode these satellite signals, which is why the service requires a special car radio or home unit.
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