Radio riding a whole new wave

Listening: As satellite subscription services grow, FM and AM stations look to an enhanced future with high-definition, digital sound.

August 26, 2004|By Christopher Boyd | Christopher Boyd,ORLANDO SENTINEL

Sofyan Alif fiddled with the buttons of a colorful car stereo at Circuit City recently, doing research for his next big purchase.

The recent high school graduate wants a radio packed with features. He's flexible, with one exception: It must be ready to receive digital satellite radio.

"About 75 percent of my friends have satellite sets," Alif said. "No matter what you want to listen to, you can find it. And there aren't any of those stupid commercials to interrupt the music."

Satellite radio's audience is mushrooming. In less than three years, XM Satellite Radio Holdings has signed more than 2.1 million customers, who pay $9.99 a month to listen to 120 channels of music and talk. Its smaller competitor, Sirius Satellite Radio, has about 400,000 subscribers at $12.95 a month.

Yet just as the two companies see hope for a profitable future, new earthbound competition is taking shape. High-definition radio, a digital format that brings compact-disc sound to FM broadcasts and allows AM stations to offer stereo programming, is now available through more than 110 radio stations nationwide.

The company behind the technology - iBiquity Digital Corp. - says an additional 300 stations are licensed to add digital. Still, that's a tiny fraction of the 13,000 radio stations in the United States.

The move by satellite and terrestrial radio into the digital era promises to change the oldest broadcast medium. Digital broadcasts allow stations to offer more than sound - radios equipped with small displays can identify songs and give listeners a look at traffic conditions.

The cost for conventional radio stations to add a digital format is paltry compared with the hundreds of millions of dollars that the satellite companies have invested in their systems. A terrestrial station can install digital equipment for less than $100,000 in most cases. Stations are able to use the same frequencies for digital that they always have used to broadcast, and they can continue to transmit analog signals for years to come.

Still, industry watchers say satellite radio has a strong chance for success. For satellite, the key to growth is content. Both XM and Sirius offer rich arrays of commercial-free music - every major genre has a channel, and songs that are never heard on commercial stations are standard fare.

"Even in major metropolitan markets where you have 30 or 40 [broadcast] stations, there aren't many genres," said Michelle Abraham, senior analyst with In-Stat/MDR, a technology research firm. "You might have one local jazz station, but with satellite, you have several channels that each offer a different kind of jazz."

Because satellite radio isn't regulated by the Federal Communications Commission, XM and Sirius don't have to adhere to government decency standards. Faced with those standards and worried about FCC fines, Clear Channel Communications decided last winter to drop radio talk show host Howard Stern from stations. Speculation flew that Stern might move his act to satellite, where his show's sexually explicit content wouldn't face FCC scrutiny.

But, for its rich array of music and talk, satellite radio has a distinct drawback - the monthly subscription fee. Terrestrial digital radio will remain free, albeit laden with commercials.

"Not everyone wants to pay for a subscription," said Jeff Jury, chief operating officer of iBiquity, which developed the technology for terrestrial digital. "The difference between terrestrial digital and satellite is very much like the difference between basic and premium cable-television channels."

Satellite offers a wide and growing range of programming that can be heard everywhere at once. XM and Sirius like to remind potential customers that they can drive from coast to coast without ever changing the station.

The transition to HD radio will likely take many years - iBiquity expects a complete conversion to take 12 years. Analog radios will still work after stations install digital equipment, and it might be a long time before enough stations have added digital broadcasts for the consumer market to covet the replacement equipment. "It's going to be like moving from black-and-white TV to color," Jury said. "Black-and-white sets still work, but today the market demands color."

April Horace, emerging-technologies analyst with Janco Partners in Denver, doesn't expect a rush to HD radio. But she said it will gradually proliferate and is certain to become the standard - eventually.

"It's a chicken-and-egg issue," she said. "Will someone want to pay $300 for a radio to listen to one station?" Conversely, will radio stations race to add digital broadcasts if few listeners have compatible receivers?

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.