The No. 1 satellite radio company has signed a deal with Alltel to provide 20 satellite music stations on select Alltel handsets. The service will cost $7.99 per month, and the release hinted at future deals with other wireless carriers.

XM's lead in the satellite radio industry over No. 2 Sirius has been dwindling since Howard Stern joined Sirius in January. The battle between the companies has shifted from a spending spree on content (XM signed Oprah Winfrey to take some of the wind out of Sirius' sales after Stern hit the air on Sirius) to hardware and services. Sirius is planning to release a fully portable receiver/mp3 player by the end of the month, XM is fighting a lawsuit over its second-generation portable receivers and rumors are flying about both services being offered on new Wi-Fi enabled devices.

The Alltel deal is a good one for XM. It could expose the service to a new group of people, who will hopefully like what they hear and translate into XM subscribers. One thing to watch out for, though, is the accounting of the Alltel/XM subscribers. Will XM use these people, who are paying a discounted price for a pared-down product, be lumped into XM's reported subscriber totals? Will XM use this deal as a backdoor tactic to meet subscriber expectations for the year? — Brian Ward

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