Slowly, Radio Stations Shift to Digital Broadcasts

Three decades ago, Jim Watkins counted himself among radio’s pioneers when he helped convert urban contemporary station WHUR-FM to stereo.

Watkins, now general manager of the 24,000-watt station here, is embracing new technology again. This time, it’s high-definition digital broadcasts, which boast CD-quality sound and allow stations to transmit extras like real-time stock prices and sports scores to special receivers.

The rollout this year of digital broadcasts at stations across the country caps a 20-year evolution. Disc jockeys long ago dumped vinyl records and audio tape in favor of digital compact discs and computer hard drives, but the last major change in broadcasting was when stations switched to stereo in the 1960s and ‘70s.

“Digital radio, Watkins said, “will have an even bigger impact.”

Maybe. But it may take awhile. Watkins acknowledges that WHUR’s $50,000 digital transformation so far can be appreciated by fewer than two dozen people in the area who have shelled out $400 or more for digital receivers.

It’s much the same story nationwide as stations invest in new technology and wait for an audience to justify the new gear.

About 80 of the nation’s 13,000 stations -- including KKBT-FM, KTNQ-AM, KSCA-FM and KROQ-FM in Los Angeles -- are broadcasting in digital, which was approved by the Federal Communications Commission in October 2002.

“It’s a fundamental change, like the shift from black-and-white TV to color,” said Bob Struble, president of IBiquity Digital Corp., a Columbia, Md.-based company that developed and licenses the technology in the United States. “Virtually every other consumer electronics product has already gone digital. Now it’s radio’s turn.”

Investors in IBiquity include automaker Ford Motor Co., chip manufacturer Texas Instruments Inc., Walt Disney Co.’s ABC Radio Networks, Clear Channel Communications Inc., Viacom Inc. and 12 other broadcasters.

So far, digital radio’s debut seems smoother than that of high-definition television, a digital standard that languished for years after the FCC approved it in the mid-1990s. HDTV’s adoption has been hampered by high equipment prices and a protracted industry squabble with the government over the transfer of new airwaves needed to carry the signals.

Radio broadcasters avoided similar problems by agreeing to broadcast digital radio over the same airwaves they use now. And they waited to launch the service until the price of consumer digital technology fell. Analysts expect prices for digital radio receivers to tumble, perhaps by as much as 75% in the next 18 months.

Also, it’s cheaper for radio stations to convert from analog to digital -- $30,000 to $100,000, compared with $1 million or more for television stations to upgrade.

“Why should radio be the dinosaurs?” WHUR’s Watkins asked as he demonstrated a Kenwood HD receiver in a promotional van parked outside the station’s studios.

Experts say digital technology will give traditional radio broadcasters better ammunition to battle an invasion of digital MP3 music players as well as fast-growing alternatives like XM Satellite Radio Holdings Inc., based in Washington, and Sirius Satellite Radio Inc. in New York. Those two companies beam subscription digital content from satellites. Unlike traditional free radio stations, whose signals travel only a few dozen miles or so, satellite services have national reach and have attracted 1.6 million paying customers.

“Clearly, the adoption of digital radio is several years off,” but HD radio promises to deliver “major sound quality enhancements” to both FM and AM radio and “allow AM radio to become a more viable music service,” said Peter Doyle, audio division chief at the FCC.

Some advertising agencies are eagerly anticipating the technology, especially the text features that could allow a marketer to display a toll-free number or website address while a commercial is running.

“Advertisers are always looking for upgrades,” said Irene Katsnelson, director of network radio at Universal McCann, whose clients include Coca-Cola Co., General Motors Corp. and American Airlines.

As seven years of blistering radio industry consolidation winds down, experts say, traditional radio’s digital upgrade looms as either the biggest opportunity since the introduction of FM stereo or the latest in a string of sonic innovations rejected by consumers.

The failures include four-channel “quadraphonic sound” in the mid-1970s and AM stereo in the early 1980s.

Radio content is likely to trump sound quality as the key to whether high-definition radio succeeds, experts say.

“Sound quality is only part of the equation,” said Michael Gartenberg, a technology analyst at Jupiter Research in Darien, Conn. If HD radio “wants to avoid the same fate as AM stereo and quadraphonic sound, it has got to find compelling content, get the pricing of the equipment down and get the product integrated into automobiles.”

That may be tough given the head start enjoyed by satellite radio, which already has deals with most of the major automakers and consumer electronics manufacturers. Although analysts forecast that as many as 4 million digital radios will be sold in 2007, that’s only a tiny fraction of the 36.4 million analog radios, and not much beyond the more than 500,000 satellite radios, the Consumer Electronics Assn. says were sold last year.

“Usually we only can afford to do a new radio when we have a [car] model update,” said Tom Wilkinson, General Motors’ spokesman for corporate technology. That means at least a three- to four-year wait, he said.

Wilkinson added that some of digital radio’s features could have a strong appeal for consumers and advertisers. He cited his 12-year-old daughter, who likes using the limited text feature on analog radios that displays artists and song titles on certain radios equipped with a display panel.

Nathan Franzen, a system engineer in Cedar Rapids, Iowa, who was one of the first people to buy a digital radio system, is an unabashed fan.

“I’ve had mine for almost two months now and I totally love it,” Franzen said.

That sort of reaction is no surprise to Watkins, whose WHUR last month became the city’s first and only station to broadcast high-definition radio.

“A lot of people think high-definition radio is for musical purists and audiophiles,” he said, “but this technology is going to take off because the listening public is acclimated to digital technology now.”