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MBP Overview: What You Need to Know about HD Radio, Updated 2/2

Terrestrial radio is in for the fight of its life, facing major competition, from new digital forms of music to satellite radio services to internet radio. But the industry has one powerful card up its sleeve, if and when consumers catch on to it: HD Radio.

HD Radio technology enables AM and FM radio stations to broadcast their programs digitally – a tremendous technological leap from the analog broadcasts of the past. iBiquity, the company that created the HD Radio technology, says the quality of HD Radio has “the same unmatched fidelity as your digital music.” FM stations sound like CDs. AM stations sound like FM. And there’s no audio distortion, according to the company.

The HD Radio In-Band, On-Channel (IBOC) system is the only FCC-approved system for AM and FM. It provides for end-to-end digital broadcasting within the existing spectrum while allowing for continued analog broadcasts to legacy receivers.

—What It Means to Advertisers
The benefits of HD Radio for the industry go far beyond improved sound, however. Because HD Radio technology uses little enough bandwidth to allow multiple channels, multicasting can double the number of choices available on free digital FM radio. This gives FM broadcasters the ability to offer more than one program stream on its existing spectrum.

For example, stations are using their HD2 multicast channels to experiment with new music and news formats, showcase young artists and local bands, offer non-English language programming, offer niche programming, and more, giving advertisers the ability to reach a more niche market.

For example:

• Clear Channel’s WKTU-FM HD2 channel features the only country music station in New York City, while Albuquerque’s KABQ-FM HD2 channel plays Spanish Oldies.
• Greater Media has launched three multicast channels in Detroit, including Riff2, a multicast channel of its legendary rock station WRIF-FM that features a steady diet of local music.
• Beasley Broadcast Group’s WKIS-FM in Miami offers Gretchen 99.9 HD2, inspired by country music sensation Gretchen Wilson. The southern rock-flavored format on Gretchen complements the mainstream country programming on WKIS’s main channel. The station also features an HD3 channel that streams weather information from the National Oceanic & Atmospheric Administration (NOAA).

Because HD Radio is a free broadcast, listeners simply need to get a new HD Radio receiver for their homes or cars. This may be no minor investment, as the receivers are still pricey, but prices are coming down steadily.

Digital radio also appeals to advertisers because of its ability to deliver data streams alongside audio. Similar to satellite, the system can already carry program data such as song title and artist name on the radio’s readout. Future applications might take the form of text from advertising messages synchronized to display on a radio’s readout as a related commercial was broadcast.

—Building Consumer Awareness
The challenge, of course, is building consumer awareness and making sure enough radio stations make the switch to HD in order to make it worth while to invest in a new receiver. In October, 1,000 radio stations in the U.S. had made the switch to HD Radio technology and iBiquity president Robert Strubel said he expected that number to reach 1,200 by the end of 2006.

In May 2006, a study showed that one in three consumers were interested in HD Radio, but only after they were given a description of it.

—HD Radio Alliance
With that in mind, seven of the country’s top radio broadcasting groups joined to form the HD Radio Alliance, with a goal of coordinating the rollout of HD and HD2, lowering receiver prices, and jointly marketing HD digital. (A similar alliance has been formed in Brazil.)

Member companies devoted more than $200 million in ad time on their own stations in 2006 to promote digital channels and to build a dedicated website. The Alliance renewed its charter for 2007, and broadcasters have increased their advertising commitment by $50 million, or 20 percent, to $250 million in ad time.

The group also launched a nationwide consumer marketing campaign. Charter members include Bonneville International, Citadel Broadcasting, Clear Channel Radio, Cumulus, Emmis Communications, Entercom, Greater Media, and CBS Radio.

At the 2007 North American International Auto Show, HD Radio made an impressive splash, with mobile billboards, street teams and demonstrations. Automaker BMW is on board in a big way, with all 2007 vehicles offering factory installed HD Radio as an option.

—What Broadcasters and Reviewers Are Saying
iBiquity’s website includes quotes from broadcasters and reviewers talking about HD Radio technology. “For radio to broadcast only in analog, it really puts us at a competitive disadvantage. Digital radio allows us to compete much more effectively with all the other media that’s out there,” says John Hogan, CEO of Clear Channel Radio (as quoted by Dow Jones News Service).

Greater Media president/COO Peter Smyth agrees, saying that “HD Radio will lead to the renaissance of radio this decade.”

CNET believes that the Yamaha V4600’s HD Radio performance sounded better than satellite radio, and points out that it’s free.

—“HD” Is Not High Definition
HD Radio, by the way, does not mean high definition radio, according to Struble. Rather, it is a trademark term with no meaning, though hybrid digital technology is used. (Some speculate that the term is meant to conjure up the image of HDTV, which has come to mean improved quality.)

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