Infrastructure Growing Pains Hit XM Satellite Radio

By Brian Fonseca  |  Posted 2005-08-01

Infrastructure Growing Pains Hit XM Satellite Radio

In XM Satellite Radio Inc.s rise from relative obscurity to a household name serving 4.4 million subscribers in less than four years of broadcasting, the companys one constant has been change.

Trying to change the way people listen to radio was a tall order, but an even bigger challenge was preparing for the growth of the satellite radio concept and building a technology infrastructure that would support that growth.

Thanks to savvy planning and tight technology partnerships, XM has helped to radically transform the audio and digital landscape in the consciousness of consumers, and its IT infrastructure has so far kept up with the growth that is showing no signs of slowing.

XMs technology nestles as comfortably aboard major airliners and in the hands of the U.S. military as in a Volkswagen or a dorm room. With sales of XM radio units trailing only those of DVD players among consumer products sold in the United States, the Washington company seeks 20 million subscribers by 2010.

In addition, XM is growing at a rate greater than cable or television or its other airwave-transmission predecessors, according to research company Greystone Communications Group Inc.

"When youre adding 3 million subscribers per year, that is a huge challenge to scale the infrastructure, scale the people and scale the application," said Frank Patry, vice president of IT for XM Satellite Radio, wholly owned by XM Satellite Radio Holdings Inc. "With business growing this fast, there is no road map to follow ... by looking at other businesses. This is one of those things [that] if you ever get behind, youll never catch up."

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Although its current popularity may suggest otherwise, the concept of popularizing satellite radio transmissions and receivers gained little traction early on against cheaper, more easily accessible free audio alternatives. Still, it fell upon the shoulders of the companys executive team, made up of former cellular and cable employees, to design a system and data center capable of sustaining projected growth and technology demands.

"We had a timeline [designating] when we would enable capabilities," said Patry. "So, for example, launching the business didnt require analytics—there wasnt anything to analyze.

But in three years, capabilities able to do business intelligence and data warehousing had to be enabled to support the type of decision making we would have to make as to what additional channels we bring on. [We asked ourselves,] Do we do business-to-business or Web-based streaming? You need additional tools to do that."

The infrastructure had to offer telecommunications-grade support and provisioning, be able to accommodate anticipated subscriber growth, and have subscriber-activation capabilities, Patry said.

The first step in building XMs technology center included the purchase of a 100-year-old building in downtown Washington that had been a printing company. The facility was retrofitted to become what Patry describes as a stylized music factory.

In the core of the building, the data center was designed to house XMs technology and operations center, including broadcasting equipment, IT for uplink management and repeater network hardware for satellite radio transmission delivery in 70 markets.

XMs data center and technology decisions underpin three primary tenets: creating and maintaining a scalable software and hardware infrastructure, enabling flexibility to support existing and new technology, and keeping costs in line.

From the beginning, the companys strategy was to institute a building-block approach to grow the data center in 1-million-subscriber chunks. In three years, XM has gone from departmental servers to enterprise-class platforms.

Next Page: Partners important to XM Satellite.

Partners Important to XM


XM has relied on key partners to put its technology and growth vision into action. "When you look at the fact we needed to start small and scale by going up lines of processes, from departmental to enterprise-class binary compatibility, [partnerships] become important because of that reduced integration and upgrade costs," Patry said.

Topping XMs list of partners is Sun Microsystems Inc., which has worked with the company since 2001. Patry calls the Santa Clara, Calif., company the backbone of the satellite radio providers data center. Sun Account Executive Ann Lamp said Sun became attractive to XM in terms of building a data center from scratch due to Suns large base of ISV development partners and its ability to grow and scale in tandem.

"[XM] wanted that certification and compatibility matrix already built in because they were green-field building their company and didnt want to worry about integration issues," said Lamp. "No matter what they add as feature and function to their application, either from an OEM perspective or from car dealers, having that binary compatibility from our processors will give them that infrastructure flexibility to allow [XM] to grow along that path. Thats one less thing for them to worry about."

When Lamp began working with XM four years ago, the satellite radio provider started with Solaris 7.0. Currently, XM is looking at moving to Solaris 10. In addition to regular support meetings, Sun conducts quarterly reviews with XMs chief financial officer, Joseph Euteneuer, and Patrys team to stay in line with XMs technology preparation.

"I dont think it matters—the size of the company. The more you know about who you deal with, the better off youre going to be," said Lamp. "You dont wait until the 10th hour, and there will be no slippage. There are no real big surprises that will take anybody to task, and thats the way its always been since Ive been down there [at XM]."

XMs data center also uses Windows software, Cisco Systems Inc. and Hewlett-Packard Co. hardware, an Oracle Corp. database, and a Sun and Hitachi Data Systems Corp. SAN (storage area network) backing up and managing data growth on its back end.

Suns storage products have played a pivotal role in allowing XM to move applications in its data center to larger databases and platforms to keep pace with company growth without disruption.

A second data center building block comprises Siebel Systems Inc.s eBusiness CRM (customer relationship management) software, Portal Software Inc.s Infranet billing application, and Lawson Software Inc.s financial support applications running on Sun hardware and built through a partnership with Siebel.

"[Siebel] had a large portfolio of capabilities wed be adding to our business, including channel partners, sales force automation and the ability to do custom insight analytics that were all integrated into the platform. So we could incrementally add capabilities as the business expanded," Patry said.

Middleware integration among the CRM platform, billing platform, conditional access and the network interface is provided by Vitria Technology Inc.s BusinessWare platform.

The technology relationships go both ways. XM has woven such strong ties with its primary vendors, such as Sun and Oracle, that they have let the satellite provider understand and navigate their respective technology strategies.

"Their technology road map was critical for us to understand [our future] capability and how to deploy their equipment at what time and at what configuration," Patry said. "Were always looking a year or two ahead with vendors and understanding how we can scale. What will Solaris look like in a year or two? How can we leverage that?"

Next Page: Accenture assists in heavy lifting.

Accenture Assists in

Heavy Lifting">

XM also relies heavily on systems integrator Accenture Ltd. to assist with most of the heavily lifting and coding involved with project management, oversight and framework design.

XM minimizes its data center operational instability by performing a single large capability upgrade per year. To satisfy its massive retail needs, XM must have enough capacity online to weather the holiday season, which runs from Thanksgiving through the first week in January.

The company generally builds out for Christmas during the third quarter to ensure enough capacity exists to carry the retailer through its busiest time of the year.

That window allows for proper deployment, testing and tuning before processors are moved into production to handle any spikes in seasonal traffic.

Once the holiday season ends, XM turns its data center once again toward partitioning, development cycles and reallocating assets into testing using the Solaris domain.

To accommodate projected subscriber growth, XM is working with Sun to determine what equipment the organization needs to handle the bigger load. As part of that process, XM is moving data and applications hosted from production servers at its Washington-based data center to a new Ashburn, Va., co-location facility.

Completed in March, the Ashburn data center will house XMs complete IT infrastructure. The original Washington-based facility will be devoted solely to XMs broadcasting operation, including its music library, broadcasting equipment and digital rights automation—all according to XMs original plan five years ago.

"To save money and keep everything consolidated, we [originally] launched with both technologies co-located in the same data center, but the plan was to move IT out to [a second data center] so broadcasting could continue to grow and IT could grow and be most effective when we needed room," Patry said.

Buoyed by a 150-channel, commercial-free lineup, including news, sports, weather, traffic and talk, XM is burrowing deeper into the enterprise and vertical realm. XM employs Arbitron Inc.s radio ratings and media research information to track channel usage and popularity.

Last month, XM purchased privately held WCS Wireless LLC in a stock deal worth $198 million in an effort to augment its frequency range and move further into such multimedia areas as video and data.

Recently, the company joined government defense contractor Raytheon Co. to build a communications system designed to use XMs satellites to send soldiers and emergency workers information during a crisis.

XMs best channel remains the auto market, and the enterprise is planning to expand that further. XM has enabled its NavTraffic software, which provides virtual maps and real-time traffic conditions to 22 U.S. cities, to be used in 120 vehicle models for this year through partnerships with General Motors Corp., Honda Motor Co. Ltd., Toyota Motor Corp., Hyundai Corp., Nissan Motor Co. Ltd. and Volkswagen AG/Audi AG.

In addition, XM has taken to the skies. The companys audio equipment has been installed on seats aboard Airtran Airways Inc. flights and will soon be available on JetBlue Airways Corp. flights.

In the telematics realm, XM is working to resolve issues with cellular build-out and spotty coverage for companies to provide telematics services coast-to-coast without holes in their coverage pattern.

"[Companies] do this anyway. They just found us to be a better mousetrap and better way to distribute information with the platform theyve always been using," said Patry.

Along with its rival Sirius Satellite Radio Inc., XM has spoken to Apple Computer Inc. founder Steve Jobs about involvement with Apples iPod.

Sirius recently announced a partnership with cellular provider Sprint Corp. to offer select Sirius Satellite Radio programming. Patry said XM is "probably looking" at something similar.

Next Page: Joining forces with AOL.

Joining Forces with


Among other opportunities, XM expects to see satellite radio integrated into portable handheld products, said XM officials.

In an attempt to broadcast beyond the borders of North America and transmit XMs signal farther around the planet, the company entered into an agreement last month to purchase $25 million in stock from WorldSpace Inc., which is based in Washington. WorldSpace provides satellite radio services in Europe, Asia and Africa.

As part of the agreement, XM will receive warrants enabling the company to purchase $37.5 million more of WorldSpaces stock, as well as the option to invest in technology and product development with WorldSpace and other partners around the world.

To reach the mushrooming online audience, XM and America Online Inc., in conjunction with Denver-based The Anschutz Co.s Anschutz Entertainment Group unit, have recently come to an agreement on a joint venture to provide various categories of on-demand digital content that feature concerts, sports and entertainment video through the Internet across wireless, satellite, and other devices and platforms.

Called Network Live, the new enterprise will take advantage of the expanding number of homes that possess the data quality and delivery of high-speed broadband connections.

All these efforts are concentrated on content and distributing that broad range of information and material to the widest possible audience.

"The business plan was initially satellite delivery," Patry said. "As the business matured, we naturally progressed to streaming on the Internet that adds content. As technology converges, as youre seeing in telecom and land-line over IP and fiber over the home, youre going to start to see that convergence in the space were in where youll be able to get XM content into a variety of different platforms."

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