Sunday, January 4, 2004

Radio is taking another step to shake its low-tech image and enter the digital world.

Columbia-based Ibiquity Digital Corp. said the first receiver designed to pick up digital signals that are beamed by a small but growing number of radio stations will be shipped today to an electronics store in Iowa.

Digital radio is a significant technological improvement over the analog signals radio stations have beamed since the industrys birth because it eliminates static from AM and FM broadcasts.

Ibiquity is the only company licensed to develop the technology that lets radio stations broadcast digitally, and about 300 of the nations 13,450 radio stations are beaming music and news in both analog and digital streams.

But it didnt matter because consumers couldnt buy the receivers to pick up the digital signals until now.

“I think you can say this is the last component,” Ibiquity Chief Executive Robert Struble said.

Ibiquity plans to announce this week at the Consumer Electronics Show in Las Vegas that a range of manufacturers will ship digital receivers this year. Kenwood, Panasonic and JVC all are developing receivers for cars. Onkyo will make a receiver for home stereo systems.

Kenwoods receiver goes on sale today.

Shipment of the receivers is an important development for Ibiquity and for radio, which has remained unchanged since the introduction of FM radio in 1961.

Ibiquity formed in 2000, and it persuaded the Federal Communications Commission in 2002 to approve its technology that allows radio stations to beam analog and digital radio signals simultaneously. Digital radio will make AM radio sound like FM and FM radio sound like music from a compact disc, Mr. Struble said.

That improvement comes with a cost. The Kenwood receiver will sell for about $349. It attaches to a cars existing stereo. Panasonics digital receiver, which will resemble a standard car stereo and wont have to attach to an existing device, will cost an estimated $800.

Mr. Struble predicted the cost wont deter serious music lovers.

“Radios have been sold at that price for years,” Mr. Struble said, and he predicted consumer electronics manufacturers will sell “tens of thousands” of tuners this year. Ibiquity has agreements with manufacturers that provide it with a share of revenue from each receiver sold, but Mr. Struble declined to divulge the terms of the contracts.

Ibiquity is negotiating with carmakers to get digital radios included in new cars as original equipment. The radios arent likely to be an option before the 2006 model year, Mr. Struble said.

Ford Motor Co. is one of Ibiquitys many investors, a sign that its radios will show up in Ford models one day. Other investors include 14 of the nations largest radio broadcasters.

Consumers arent the only ones having to pay for digital radio equipment. Radio stations are spending about $5,000 each to license Ibiquitys technology to beam digital signals. They also have to buy new equipment, and the conversion from analog to digital has cost stations $50,000 to $200,000, said Dennis Wharton, spokesman for the National Association of Broadcasters.

Despite the cost, many more stations are likely to invest in the technology and equipment to go digital, Mr. Wharton said.

“I think the industry is embracing it because of the sound quality improvement,” he said.

In the Washington area, Howard Universitys WHUR has licensed the technology. So have public radio stations WETA and WAMU, Ibiquity says.

Ibiquity isnt the only company pushing radio toward digital broadcasting. XM Satellite Radio and Sirius Satellite Radio market subscription radio services that also offer clear streams of digital music and news that are beamed from satellites. XM has said it has 1 million subscribers paying $9.99 a month for access to 101 channels. Sirius has 200,000 subscribers who pay $12.95 a month for access to 102 channels.

Neither satellite radio service considers Ibiquity a direct competitor, even though an increasing number of radio stations are beaming digital radio signals.

Local radio still has too many commercials, repeats too many songs and cant beam signals far enough to keep people from subscribing to satellite radio, XM spokesman Chance Patterson said.

Ibiquity is just as confident that local radio is as vital as ever. An estimated 250 million people listen to terrestrial radio each day, and U.S. consumers own 800 million radios, Mr. Struble said.

“I dont think anyone is viewing satellite radio as the death of AM and FM. XM has 1 million subscribers. Even if they hit 5 million or 10 million subscribers, that would be a fantastic success, but its hardly a dent in radio,” he said.

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