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Hoping to Dominate Radio

September 25, 2007

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 Hoping to Dominate Radio


September 25, 2007


By Kara Rowland - HD Radio has a long way to go — and the technology"s developer acknowledges it.

However, the Columbia, Md., company is confident HD Radio will catch on.

"Five years from now, you won"t walk into a Best Buy and say, 'I want an HD Radio." You"ll just say, 'I want a radio" — because that will be the standard," said Robert Struble, chief executive officer of IBiquity Digital Corp., a private company that owns the rights to the technology.

HD Radio combines digital signals with traditional AM/FM analog signals, improving sound quality because HD receivers can filter out typical distortions that occur when the signal encounters a tall building or a large hill. It enables broadcasters to offer multiple channels using the same amount of radio spectrum.

Today, listeners must buy a special HD Radio receiver to decode the combined digital and analog transmissions. Several manufacturers make 50 models of HD Radio receivers, which can range from $99 to more than $1,000. HD Radio requires no subscription.

According to IBiquity, HD Radio boasts CD-quality sound on FM radio and traditional FM-quality sound on the AM airwaves.

About 1,500 of the country"s 15,000 or so AM/FM stations are broadcasting in HD. HD Radio programming is available in the top 250 markets, Mr. Struble noted. In the Washington area, there are nearly 30 HD Radio channels that range from 24-hour bluegrass to oldies to unsigned bands.

Radio stations that have multiple HD Radio channels air a digital version of their marquee programming on the first channel, using subsequent channels for new offerings that might not make economic sense to air on AM/FM airwaves. Most broadcasters have rolled out HD Radio channels as commercial-free, though Mr. Struble pointed out that the decision to air commercials is up to broadcasters.

HD Radio listeners are hard to count because they do not subscribe to the service and radio ratings firm Arbitron does not measure HD listening. Mr. Struble said receivers number in the "hundreds of thousands."

IBiquity earlier this month signed an agreement with Apple Inc. to allow listeners to "tag" songs heard on HD Radio for purchase on Apple"s ITunes music service. New HD Radios equipped for ITunes tagging will allow the listener to store song information on the receiver. The new receivers will be released in time for holiday retail sales, Mr. Struble said.

If office space is any indicator, then IBiquity is confident of its chances. In April, the company moved its headquarters to a new building double the size of its previous dwelling at 19,000 square feet. The company — which has facilities in Detroit, Hong Kong and Tokyo — also upgraded its office in New Jersey.

IBiquity"s 129 patents adorn the walls of its Columbia office, which includes a new testing facility that is capable of re-creating the HD Radio broadcast process to help certify and improve the technology.

"A lot of people think the development is done," said Randy Richter, head of the lab. "And that"s not true."

Mr. Struble said it will be awhile before the company develops a portable HD Radio device. One of the challenges is that the high-power chip set required reduces battery life.

"It"s got to be on the devices that people are carrying around," he said of cell phones and music players.

HD Radio has yet to be rolled out in vehicles made by any of the Big Three automakers, but the service is available in all new BMWs and soon will appear in some Hyundai and Jaguar models. Receivers are sold at major retail chains including Best Buy, Circuit City and Wal-Mart.

IBiquity does not have a position on the proposed merger between XM Satellite Radio and Sirius Satellite Radio, said Mr. Struble, who described the satellite radio industry as a complement, and not a threat, to HD Radio.

"That is the niche service; this is the mass-market service," he said. Regardless of whether the merger is approved, "the battle will be fought where the battle has always been fought, and that"s content."

Not everyone is optimistic about the future of HD Radio. Robert Unmacht, a former radio station owner and media consultant for IN3 Partners, called the technology "too little, too late."

"What is in the car — that will be the biggest thing for radio," Mr. Unmacht said. "The future is broadband. [HD Radio] would take five years to get into cars widespread; by that point we will be into the broadband world."

IBiquity has not turned a profit and won"t for at least the next couple of years, said Mr. Struble, adding that consumer education is one of the company"s biggest hurdles. To help spread the word, broadcasters have formed the HD Radio Alliance, which spent $250 million in advertising this year.

Tom Taylor, a radio veteran who edits Radio-info.com, said HD Radio is "a case where the radio industry needs to work together as an industry in a concerted effort."

Mr. Struble acknowledged the challenges ahead.

"By no means are we raising the flag of victory now," he said. "We"ve got a lot of work to do."
 

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