Sirius Satellite Radio Inc. (NASDAQ: SIRI) saw a quarterly subscriber increase of more than 50% as the satellite radio company reported a smaller-than-expected Q3 loss this morning. Still ahead is Sirius' planned merger with competitor XM Satellite Radio (NASDAQ: XMSR), which is still on the regulatory burner as this is being written.

Sirius did see a Q3 loss of $120.1 million ($0.08 per share) compared to a year-ago loss of nearly $163 million ($0.12 per share), but revenues did rise 45% to $241.8 million for the quarter, compared to 2006's $167.1 million. The results barely fell short of the market's expectation of $244.3 million. Putting it another way, Sirius pretty much hit analyst expectations. How the estimates can nail such a specific figure is anyone's guess.

Sirius had a devil of a time in the quarter when it can to subscribers, as it added almost 525,000 new ones to its ranks for the July-September period alone. This is the unreal part: Sirius ended the Q3 period with right at 7.7 million subscribers -- a 50% increase than a year ago.

In other words, Sirius added half its customer base just in the last year alone. Now, that's growth (in subscribers, not profit). XM Radio still has more subscribers at 8.6 million, but Sirius may indeed have more before the merger is finalized and complete if it continues growing at the rate it has been in the last few quarters.

The initial fanfare of Sirius Satellite Radio's (NASDAQ:SIRI) purchase of larger rival XM Satellite Radio Holdings(NASDAQ:XMSR) has died down for now. But I am sure it will heat back up in a huge way once Sirius CEO Mel Karmazin brandishes his tongue at federal regulators, who will want to know how combining the two companies into the nation's sole satellite radio provider will benefit consumers.

For one, consumers do have a range of choices for audio entertainment in the car these days. Standard analog terrestrial radio, the newer HD Radio, and portable music players like the iPod can all be seen as competition to satellite radio. This is a very valid argument, and it's hard to refute when the majority of new passenger vehicles and SUVs include an "auxiliary input" on their factory radios to make it easy to listen to that entire music collection on the road from your iPod or other MP3 digital music player.

If we remember history, though, federal regulators blocked a similar proposal from satellite TV operators DirecTV Group (NYSE:DTV) and EchoStar Communications (NASDAQ:DISH) back in 2002. At that time -- and still today -- there was ample competition. Analog (and free) TV, pay TV in for the form of cable television and DVD players were all thought to be the competitors to satellite TV. Federal regulators didn't buy it, and the proposed merger did not happen. What is different here?

Technically, not a whole lot -- except this argument talks about entertainment while mobile, not stationary. Would a combined Sirius/XM be considered a "monopoly" when so many other consumer choices for in-vehicle entertainment exist? In one sense, no. But, if we are talking about a monopoly just in the arena of satellite radio, then yes -- a monopoly would exist in that market after a merger, almost by definition. If programming doesn't fit the needs of consumers and prices go up, a satellite radio consumer would not be able to turn to another satellite radio competitor -- as there wouldn't be one.