Things got nasty on the last day of the Federal Communications Commission's proceeding on the XM/Sirius merger, but about something even more contentious than the proposed union: digital audio copyright rules.

The Home Recording Rights Coalition (HRRC) has nothing to say about the possible marriage of XM and Sirius, their July 24th filing confesses, but they sent comments to the FCC anyway to respond to the "the ill-considered and outrageous proposal" of the Recording Industry Association of America (RIAA), submitted two weeks earlier.

The RIAA trade group represents the U.S. recording industry. In its filing, RIAA argued that "a key condition of the merger" should be to "foreclose" XM and Sirius from asking for "below market royalty rates" for recording copyright licenses.

The Digital Millenium Copyright Act of 1998 required all satellite radio companies to purchase licenses for sound recordings from record companies—in addition to licenses from composition copyright owners. XM and Sirius have asked for lower recording royalty rates, citing their underdog status in the broadcasting industry.

"RIAA believes that XM and Sirius are no longer new, struggling companies and should be paying market rates for such compulsory copyright licenses at present," the trade group writes, "but certainly, XM and Sirius should not be allowed to argue for less-than-market compulsory rates after a merger."

And furthermore: "the Commission should require XM and Sirius themselves to acknowledge that if, as they say, they are part of a larger marketplace of digital music services, then following a merger, they should pay for sound recordings at rates generated in this broader music market."

The hell the FCC should, retorts HHRC, which defines itself as an organization "defending your freedom to make home recordings of music and movies." HHRC says the Commission can't move on this question because:

• Congress didn't give them the power. "One searches the Communications Act and the Copyright Act in vain for any suggestion of Commission authority to announce whether the SDARS [Satellite Digital Audio Radio Service] recording-capable receivers violate copyright law, or to enforce any such sui generis interpretations through conditions, or otherwise," HHRC writes.

  HHRC's filing gets particularly exercised over RIAA's request that the FCC "should also seek input from the Copyright Office and copyright owners to help determine how to ensure that the merged entity does not offer sound recording distributions [like Rhapsody or Napster] to their subscribers under the guise of a performance license in the future." The Commission has no jurisdiction over these matters, HHRC reiterates.

• An FCC ruling on this issue would interrupt three Federal lawsuits in which questions of the Copyright Act's applicability to satellite radio are being arbitrated. "To even consider copy protection mandates in this proceeding would require the Commission to hear and evaluate the same evidence already being considered in the courts," HHRC argues.

Tuesday July 24th was the last day of the FCC's comment period on the proposed merger of XM and Sirius satellite radio. News reports say the Commission will decide the issue some time this year. The matter is not scheduled for the agency's upcoming July 31st meeting.