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NAB Examines New Distribution Methods for Radio - 2002-04-11

At this week's gathering of the National Association of Broadcasters in Las Vegas, Nevada new distribution methods for radio are gaining attention. Broadcasters say satellite and digital technologies are changing radio.

Among the 95,000 delegates gathered here at the National Association of Broadcasters annual convention, local or "in-band digital radio" is now garnering attention. Designed to replace the local traditional analog radio of today, it is suppose to deliver CD Quality audio for FM stations and increased clarity for current medium wave radio stations.

In-band digital radio is for local stations, which can be picked up for free. It will digitize radio station signals on their current frequencies. But this is different from the Eureka 147 format in Europe, which uses a different frequency spectrum.

It also differs from North American Satellite radio networks XM and Sirius, which are national services requiring a paid subscription and a special rooftop receiver.

The new XM and Sirius satellite services are doing better than expected. Several auto manufacturers are offering, or will offer, receivers for the services in their cars. According to company estimates, XM listeners are expected to grow from the current 76,000 to 350,000 by the end of the year. And the radio industry gathered here in Las Vegas is hoping to build on that success.

The Consumer Electronics Association is a Washington DC based group representing over 1,100 electronic manufacturers. Association President Gary Shapiro says the success of satellite radio and the acceptance of digital products should help with the introduction of local digital radio. "Almost every consumer understands the value of digital. Especially CD quality is something that means something and resonates with the public. And certainly the rapid growth that we're seeing from the satellite radio services, which is a subscription-based service, will enhance the appetite of the American public for in-band on-channel digital radio," says Mr. Shapiro. "So, I think it'll happen fairly quickly. 2002 is just a start-up year. 2003 will probably also be relatively start-up. I say by 2004 it'll be going more mainstream."

The optimism is despite the lack of enthusiasm for digital radio in Europe and Canada, which has been met with minimum acceptance by consumers.

Digital radio for local, free stations has been talked about for over a decade. Now that there has been an agreement on technical standards, manufacturers are running at an accelerated pace.

The company "iBiquity" is one of the developers behind the in-band digital radio. The company plans to have dozens of stations using the technology by year's end.

President and CEO Bob Struble says the marketing campaign will begin in six key American cities. "Those markets are New York, Chicago, LA, San Francisco, Seattle and Miami. So our plan is to get seventy to a hundred stations on the air this year. In those markets you cover 50 million listeners if you get all those markets up. So that's, roughly one-fifth or one-sixth of the country's population," he says. "So we would hope, certainly by this time next year, at least in those major markets with that sort of population coverage you'll see hopefully a whole host of people who would have and know of digital radio."

David Workman is the President of Ultimate Electronics, a chain of 46 electronics stores in the mid-United States. He says the introduction of digital radio will liven up sales and interest in audio products. "Quite frankly, it's no secret that the audio business has been suffering over the last couple of years because of the absence of any new technology," he says. "It will be, I think, a refreshing change for us to finally be able to sell some legitimate new technology to the consumer in the audio arena."

The biggest problem with the launch of satellite radio is the higher than expected consumer demand is outpacing supply.

For retailers like Mr. Workman, achieving the proper balance between the potential demand and the available supply will be the biggest problem for digital radio. "That would be my largest concern is that we get ourselves all dressed up in this technology and unfortunately have no one take us to the dance," he says. "So, I would urge all of the hardware manufacturers to work with their retail partners closely, give us a clear understanding of what hardware is going to be available and then we can meet our promotional efforts accordingly."

Mr. Workman believes that paid satellite radio and local digital radio will have to be combined to avoid a war over formats.

For the first few months after digital signals go on the air, only AM stations will be able to broadcast in digital during the daytime.

Regulatory bodies like the National Radio Systems Committee and the Federal Communication Commission have concerns over interference and signal quality.

Even though digital radio has been in development for over a decade, FCC Commissioner Michael Copps says there are still several technical questions to be answered. "What are the interference issues? Those are always central to the regulatory enterprise. We'll be looking at that," he says. "The transmitters, the roles of the transmitters, so I don't think there will be a dearth of regulatory issues."

If development goes according to plan, supporters of digital radio expect the format to be common, first in cars and then in homes, by 2005 at the latest.