Digital Cable Radio Is Clearly on Its Way

The crystal clear sound that has made compact discs one of the fastest-selling consumer items is coming to cable this summer as three companies launch digital radio services aimed at duplicating the success of Home Box Office, MTV and other cable programs.

Next month, Digital Radio Labs in Carson says it plans to join General Instruments’ fledgling Digital Cable Radio service in Pennsylvania and offer selected cable-television subscribers in San Diego and Los Angeles more than two dozen channels of commercial-free, compact-disc quality sound for a monthly fee of $7 to $12.

Later this summer, International Cablecasting Technologies Inc. of New York plans to start a similar service in several cities, including Chicago, Los Angeles, San Francisco and Seattle, with backing from cable giants Tele-Communications Inc. and Viacom International, among others.

“We are going to do for the stereo what cable did for the television set,” boasted David DelBeccaro, vice president of digital cable radio at General Instruments’ Jerrold Communications division in Hatboro, Pa.

Although analysts say the services have a shot at becoming as successful as the huge cable-television industry, the companies are proceeding cautiously not to upset the powerful record industry, whose artists will supply most of the music for the new services.

The record industry has long been concerned about lost record sales because of home taping from high-quality digital sound sources. But several companies, including Capitol Records, are eagerly backing the digital radio efforts in hopes of promoting record sales.

“We’ve designed our system to be record-industry friendly,” said Bill DeLany, president of Digital Planet, the Carson subsidiary of Digital Radio Labs. “We won’t play albums from cover to cover or publish play lists in advance. The hope is that record companies will get a chance to promote music that wouldn’t get” prime display space in a store.

Digital cable radio will feature compact-disc quality transmissions of music packaged for niche audiences such as rock fans, jazz aficionados or folk music lovers. Some of the services also plan to replay foreign and domestic radio stations as well as digital simulcasts of soundtracks for movies on HBO and other cable services.

Like other recent technologies with the “digital” buzzword, digital cable radio offers improved sound by relying on circuits that electronically convert a sound wave into a string of numbers. These numbers form a digital snapshot of the music that all but eliminates the distortion found in conventional sound reproduction such as hiss or wow and flutter. The service would enter a home through the same wire that brings cable television. A subscriber would connect one cable to his TV and the other to his stereo to receive digital cable radio. The equipment would not have to be modified.

For all of its technological promise, however, digital cable radio could face significant competition from emerging digital radio broadcast technology.

Digital broadcasts, which would be received directly through a portable radio rather than a home-bound cable, are being tested in Europe, Canada and Japan, and are scheduled to be tested next summer by the National Aeronautics and Space Administration.

Three companies, including Pasadena-based Radio Satellite Corp., are seeking federal government approval to launch the service as early as 1993. But Radio Satellite President Gary K. Noreen said digital cable radio may be more suitable for home listening than his venture, which is designed primarily for cars and would require consumers to purchase a new kind of digital car radio receiver that would cost $500 to $1,000.

For those same reasons, commercial radio broadcasters aren’t too concerned about digital cable radio’s potential competitive threat.

Arbitron, a leading audience measurement service, says at least 40% of radio listening is done outside the home, a market cable radio won’t reach. What’s more, digital cable radio services aren’t expected to offer local news and weather, staples of local stations.

Digital cable radio “is a different kind of animal in a couple of senses,” said David Franzblau, an analyst at Paul Kagan Associates in Carmel. “You are targeting a home audience for a medium that’s by nature . . . a portable technology. But since it is going to be commercial-free, they may have a viable niche.”

Initial tests of the service have been promising.

During the past two years, for example, General Instruments captured 7% to 10% of the roughly 6,000 cable households it solicited in Sacramento, Willow Grove, Pa., and De Land, Fla.

Though those figures may sound low, Franzblau says digital cable radio won’t need cable TV’s 50% to 75% penetration rates to be successful. He estimates that each of the three companies “probably only needs about 500,000 subscribers (nationally) in order to break even.”

If early consumer reaction is any indication, the digital cable radio may not have a problem meeting subscriber goals.

“We suffered through it originally because of all of the service problems, but now when they send this digital stuff through the cable, you can recognize it (the superior sound) right away,” said Victor J. Osmola, a retired AT&T; equipment installer in Huntington Valley, Pa., who subscribes to Digital Cable Radio. His only complaint about the $6.95-a-month, eight-channel service is that “they play too much rock ‘n’ roll.”