Robert Struble, President of iBiquity Digital.

Electronics consumers are making the switch to digital products: CDs, DVDs, digital satellite radio, digital TV, digital cell phones, digital cameras — the list goes on. One notable area that has yet to make the transition to digital is radio broadcasting. We still rely on broadcast technologies developed in the 1920s and 1930s when listening to our local AM and FM radio stations. That's about to change, as HD Radio technology emerges as a new force in the radio marketplace.

The 2004 Consumer Electronics Show in Las Vegas featured nearly 2500 exhibitors and was attended by over 120,000 people. Among the incredible range of products and new technologies on display, HD Radio technology generated an enthusiastic buzz. Digital radio promises to revolutionize radio broadcasting, with improved sound quality, text and information display, and the possibility of interactive functionality. Unlike the confusing switch to digital television, there is no need to create an entirely new broadcast infrastructure. Radio stations that go digital simply add a digital carrier signal onto their existing broadcast, so there are no compatibility issues with older radios — they'll still receive the same AM or FM signal they always have. When you buy a new digital radio, you'll be able to enjoy the improved sound quality and functionality of digital broadcasts. The transition is much like the one between black and white and color television.

iBiquity Digital is the driving force behind HD Radio technology. They are the sole developer and licenser of the technology and software that will make the promise of digital radio a reality. Crutchfield's Todd Cabell caught up with iBiquity Digital president Robert Struble at the 2004 C.E.S. show in Las Vegas. His enthusiasm for this new technology was evident as we talked to him about HD Radio technology. (Transcription and introduction by the Crutchfield's Ken Nail.)

Q: Let me ask you first — what is HD Radio technology, and why would I, as a consumer, want it?

A: HD Radio technology is the conversion of AM and FM radio from analog to digital. Consumers are now well aware of every other consumer media essentially going digital — albums to CDs, VCRs to DVDs; digital cell phones; digital cameras, and digital televisions. At a high level consumers get that digital means some things — it means higher quality, it means convenience, it means choice, it means interactivity — and all that stuff?s going to come with radio.

You start with upgraded sound quality — FM is going to sound like CDs; AM like FM, so you?re going to see music again on the AM band! You?re going to eliminate the static, the hiss and pops you get driving around town so it?s really like a CD experience in your car. In addition to that great audio, you?re talking about a host of new, previously unavailable data services. That can be as simple as song and artist, CD title scrolling on the screen; traffic and sports.

We?ve got apps now where the station can relay real-time traffic information which can be overlaid on a navigation screen, so you can dynamically re-route to get around traffic blockages. There?s thousands of other cool apps we haven?t even thought of yet — once you get radio onto the digital platform all that stuff becomes available. Once you go digital the whole world opens up, and radio is going to have those same experiences.

Q: Let?s talk about the sound quality. How does the sound quality compare? We know that FM stations are restricted in their frequency range, from 50 to 15,000 Hz — any restrictions with digital radio?

A: We?re talking a little bit in different terms, here. The digital in FM is broadcast at 96 kilobits per second, with a specialized CODEC compression technology designed for the system. That tests out to CD quality on FM. On AM, you have a much smaller bandwidth, so we?re operating at 36 kbps — that approximates FM, so you?re talking about full stereo with much broader dynamic range. You hear the highs and you hear the lows, you?re not listening to it like it?s in a paper bag!

Make up your own mind! Click here to listen to the difference between regular radio and HD Radio signals.

HD Radio technology -- coming soon!

Q: What does the station have to do to upgrade to digital?

A: The technology is designed so it?s like the upgrade from black and white to color television. There?s going to be a simulcast of digital and analog content, so there?s no content requirement, and the stations are already playing digital content, like CDs?what the station has to do is roll in two refrigerator-sized racks. The one critical piece is called a ?digital exciter,? that creates the wave form. The cost to a station when all is done is averaging 75 to 80 thousand dollars — not peanuts, but when compared to digital television, where it?s a two to three million dollar event, you?re talking about something that?s quite affordable.

Q: Is there any government involvement in terms of regulation?

A: Yes there is. There was FCC approval of the technology back in October of 2002. Radio is not only a unique part of the American experience, but there are also very important public interest reasons, like emergency alerts, so you can really only envision one standard for digital radio across the country. The FCC stepped in back in October after exhaustive testing and a long process on our part and approved the technology.

Q: Is there any sort of mandate from the FCC as to a percentage of stations that need to go digital?

A: There?s not, and there doesn?t need to be! There?s an important distinction here between radio and televison — television was awarded new spectrum to put the digital in. There?s a very important incentive for the government to reclaim the old spectrum. Digital radio is not like that — we actually use the same analog AM and FM (frequencies) and just insert the digital in there and make it a lot more efficient. There?s nothing to reclaim. This will be very much a market-based transition.

Q: We talked a little bit about features — traffic updates; weather reports. In terms of song and artist information, is that something that stations will have to do differently or is this something that?s already in their database that they can use?

A: It depends on the station, but in most cases if anyone has bought, in the last ten years, studio automation equipment, what that does is let the jock see the next track coming up, what?s the next commercial — it?s out there for them on a screen. We?ve got a small piece of code that just takes that data and puts it into the transmission chain and broadcasts it out on the air. It?s not hard.

Q: Let?s talk about products. I know one of your partners is Kenwood. Who else do you have launching this product?

A: In terms of our licensees on the receiver side we have, I think, twenty different licensees. It?s Kenwood, Panasonic, JVC, Onkyo, Clarion, Harmon-Kardon, Alpine, on down the line. Anybody who is more or less anybody. The headline at this show is pretty much the guys who will be launching product in the next couple of months. Kenwood has the first one out there. We actually had an event earlier this week in Cedar Rapids, Iowa, where the first consumer bought the first digital radio from an electronics store there. That?s out and available. Panasonic announced on Tuesday or Wednesday that they will have product available in March, and JVC as well. In home, both Onkyo and Harmon-Kardon will be out this year as well. We expect through the course of this year those that have formally announced, but I would expect you?ll see announcements through the course of the year for aftermarket radios, high-end home and table radios.

Kenwood's KTC-HR100 HD Radio tuner is the first on the market.

Q: How about OEM, in terms of the car manufacturers?

A: It?s coming, but I wouldn?t count on any in ?04. The radios are ready, both Visteon, Delphi and other original equipment suppliers have radios ready. The question is getting on a car platform, and Detroit has a different production cycle. I wouldn?t anticipate ?04 — it?s not out of the question, but realistically that?s probably more of an ?05 story.

Q: I wonder, with the interactivity you?re talking about that digital opens up, are there any privacy concerns for the consumer — are you going to be taking any information from the car and the radio itself?

A: The answer is you could, and the consumer will have the option to opt in and opt out of this kind of stuff. Let me be clear about that — this is a one-way technology; it?s a broadcast technology.

So if you envision, and we do, things like a ?buy button? on the radio, you?re going to push the buy button, the information will be transmitted from the digital radio to your in-car cell phone, a call will go out to some fulfillment center, the MP3 will downloaded back over the radio maybe, or you?ll get a CD in the mail, or concert tickets, or what have you.

To do all that, you?re going to have addressable radios and you?re going to have conditional access. So certainly there?s going to be the ability to track things, but it?s much less concerning than a media like the Internet, where everything is full-time and real time. I think consumers will always have the option to not utilize those functions.

Q: How does HD Radio technology tie in with satellite radio? Is it complementary to that?

A: It?s very complementary. We view it as the upgrade to the base service. Sirius and XM — we love them both, we provide technology to both, and we hope they?re successful — but in their wildest dreams if they get 10 or 20 million subscribers, that?s a great business. 250 million people listen to radio everyday. This is about upgrading the base technology. It?s like black and white to color TV. There are also other differences. A subscription-based model versus a free over-the-air model, a model that?s in every market and has a unique local flavor and character. But there?s certainly plenty of room for both services. Our model says that in the future you?ll have AM, you?ll have FM, and you?ll press a button and have XM and Sirius — it?s just another band on the radio. Now that extra band will cost you more money, but hey, great, that?s all good!

Q: How about for advertisers? What sort of advantages do you see for them with digital radio?

A: We think it?s a dead natural. If you think about it from a business model standpoint, when you press that button and you get your traffic, that?s going to be brought to you by somebody. You could envision subscription models, but the advertiser model is tried and true, and you?ve got an army of ad salesmen out there. They?re going to view that text display as a billboard in the car. That seems to work, and consumers seem to be able to tolerate a bit of advertising to get a whole bunch of free new services. Our view would be that that?s the most viable model, but it?s not to say that subscription or other models might not also be available.

Q: How about rollout schedule, in terms of stations?

A: Really in ?03 the story was the station side. The big story here is that ?04 is going to be the consumer side. We?ve got 300 stations around the country that are already licensed and are in the process of operating or in the process of converting. All that conversion has come in advance of one receiver being on the shelves. It?s a testimony, we think, to the importance the industry puts on the technology. Those 300 stations, 100 different markets — you?ve got ten on in New York, you?ve got KROQ in LA, you?ve got WBZ in Boston, you?ve got KFOG in San Francisco. These are big, well-known stations that cover a lot of the country. We envision that continuing in ?04. We figure about 300 to 350 more stations and you?re up to 75 to 80 percent coverage — and that?s critical mass!

Q: Is that a part of your business plan, going after the major markets first?

A: It was, but on the other hand we had targeted six or seven launch markets where receiver guys said they sell a lot of radios: New York, Chicago, LA, San Fran, Seattle, Miami. So we put a lot of focus on those markets and we?ve done great in those markets. Miami has something like 18 stations, it?s been unbelievable. But you?ve also got two guys in Cedar Rapids who went; you?ve got three guys in Alaska, we?ve got a guy in Birmingham, Alabama. It?s a very diverse industry — there?s 13,000 stations out there — and many of them said they?ve been following this a long time, and when the FCC gave its approval, you saw things happening. This event in Cedar Rapids is a good example.

Q: How did it wind up that Cedar Rapids was where the first HD Radio tuner was sold?

A: It?s a great example of a market doing what a market should do. Cedar Rapids, Iowa; single station; two guys own the station — KZIA, Z-102.9. Loved radio all their lives; wanted to be one of the first to convert, and they did. When the radios came out they went to their local retailer and said ?Hey look, we want to do something here. We want to promote this, let?s do something together.? Both of them came together and said ?Look, we want to sell the first consumer (HD) radio in Cedar Rapids.? We said, ?great, we?ll show up if you want us to,? but it?s very much an example of us building the technology and then people are going to do very cool things with it. We think traffic is going to be a great app — great. But there are a lot of little companies and big companies saying let?s do this, or that, or the other thing, and that?s the beauty of the technology. Once you?ve got the infrastructure in place — for example, surround sound — we never thought of it — somebody came up to us and said we can do surround sound. We?ve got an example of it right over there!

Q: What?s the history of iBiquity?

A: ibiquity was formed as a partnership of broadcasters back in the early 90s, before my time. It was almost like a research/science project for the first five or six years. It became part of CBS and Westinghouse which were one of the early partners in the modern era, if you will. We spun that business out of CBS, set it up as a separate company, got a lot of funding from other broadcasters back in 1998.

Q: Last question. What exactly is iBiquity?s role in this? For example, do you make the hardware, or just the software?

A: It?s the software. Our model is a licensing model. We make money whenever one of those is sold, I get a small check. Whenever a station goes on the air I get a check when they buy the hardware and I get a software license for the station. Our role has been technology developer, but to go to market it?s really the existing guys through the existing channels. That?s like a Dolby, like a Qualcomm — that sort of model. Our role overall though, is we?ve got to be a coordinator, a stage manager, because we?re trying to move five or six different industries. That?s the challenge of the business.