In what's been described as the biggest leap for radio since the introduction of FM, the first high-definition radio receivers going on sale this week will bring listeners CD-quality sound and on-demand weather, traffic and news.
Kenwood USA sold its first black box digital receiver Monday in Cedar Rapids, Iowa, where KZIA-FM Z102.9 radio station broadcasts digitally. Several manufacturers from Delphi to Panasonic are unveiling new HD radio receivers - some of which will go on sale this year - at this week's Consumer Electronics Show in Las Vegas.
As more stations begin broadcasting digital signals, it will be a boon for iBiquity Digital, a Columbia company that developed and licensed HD, or high definition, radio technology.
"This is a significant move," Michelle Abraham, senior analyst at In-Stat/MDR, a market research firm in Arizona, said of the rollout of digital radio equipment. "It may not seem duly significant in the beginning, but in a few years from now, it will be a huge leap.
"The first radios will have better-quality sound, and stations will be able to send down program information that can be displayed on the face of the radio, but what's really exciting is what will be added down the road," Abraham said. "In the next couple of years, you'll see multichannel sound, on-demand access to traffic reports and weather information and storage capabilities that will allow you to tape a broadcast and listen to it later."
HD radio will also give traditional radio stations better footing against the emergence of satellite radio technology, which now boasts 1.5 million customers between two public companies, XM Radio Holdings in Washington and Sirius Satellite Radio in New York. Both satellite radio companies charge customers a monthly fee for access to more than 100 stations, most of which are commercial-free. Their signals are beamed from satellites to Earth.
About 100 out of 13,000 radio stations in the country broadcast digitally now. Another 200 are licensed to start in the next year or so, said David Salemi, vice president of marketing for iBiquity.
Launched five years ago, iBiquity overcame its first obstacle in 2002 when it persuaded the Federal Communications Commission to approve its technology, which allows stations to beam analog and digital signals simultaneously.
The company's investors include a who's who of some of the nation's top media companies such as ABC, Clear Channel and Viacom, making a bet that the new technology will be a wave of the future in audio. iBiquity supplies the software to broadcasters that allows them to encode a radio signal digitally and to chip makers that enables them to build radio receivers that decode the signal.
"Those 300 stations can reach 20 million people in the country," Salemi said. "It's a huge audience base. We're bringing the ability for broadcasters to compete with digital technology. Radio has survived TV, CDs and DVDs, but manufacturers are bringing so much digital technology into cars so fast, they have to do something to compete. With these HD radios, it's really going to put them in a position to retain and grow the industry.
"FM is going to have CD-quality sound and AM is going to sound like FM," Salemi said. "It could really help revive some struggling AM stations."
But the estimated 200 million radio listeners aren't likely to migrate to HD radio soon, even if they're able, experts say. Receivers cost $350 or more. Also, radio stations are not required to broadcast digitally. The cost of adding transmitters and other equipment to broadcast digitally can average $75,000 to $100,000 for many radio stations.
"Eventually, digital radio technology will be in every new car," Abraham said. "The prices will come down so that the difference between buying a radio receiver that is analog only and one that includes digital will not be that great."