2009 To Bring HD Death Rattles?

While most policy-pundits are focused on the fast-approaching DTV transition and the potential selection of a new FCC Chairman, the saga that is digital audio broadcasting (otherwise known as “HD Radio”) continues to fly under the radar. However, this may not be the case for long.
Due to heavy industry-maneuvering and a shamefully-complicit FCC, the U.S. radio industry has locked the medium into a sub-standard, proprietary broadcast protocol. The problems with this protocol have long been known. Thus, if there is any force that might bring down HD Radio, it will be the marketplace.
There are several signs that the marketplace is now beginning to act:
1. Stock in publicly-traded radio companies are at all-time lows; most are trading under $1 a share. Several major companies, such as Clear Channel, are preparing another massive round of layoffs. When the company went private a couple of years ago, one of its first moves was to divest itself of 39% of its total station holdings – basically all stations not within the top 100 U.S. radio markets. Do you think Clear Channel invested in HD upgrades for those stations before they were sold? My guess is no – and the new owners aren’t in any hurry to spend hundreds of thousands of dollars to put HD sidebands on the air. (I recently found out that our local public radio station spent $400,000 to install HD on its FM signal – and it is duplicatively simulcasting its AM station with all that scratch. Meanwhile, the staff at said station fear for their jobs.)
2. As of today, stations in Washington D.C. are shutting down their HD signals “en masse.” The reasons and rationales vary, but you can bet that money is part of the problem. You see, iBiquity (the proprietor of the HD technology) makes stations pay a recurring license fee in order to broadcast using its HD protocol. With the economy in deep recession, and radio companies desperately looking for ways to curb costs, does it seem prudent for any station manager to sink money into a technology that has yet to provide any tangible returns? This is much different from the wait-and-see approach of most stations – the fact that early-adopters of HD may be bailing can’t be good.
3. One of the reasons why some (especially AM) stations may be turning off their HD signals is due to anecdotal evidence that HD sidebands interfere with Arbitron’s latest listener-tracking technology. If you ran a radio station, would you run a signal that may actively interfere with (and artificially deflate) your ratings?
4. HD Radio has yet to find its “killer application.” First, it was supposed to be multicasting, or the provision of multiple program streams over a single AM or FM signal. Unfortunately, multicasting takes content, and making good content is expensive. Again, Clear Channel (a charter member of the now-rudderless HD Digital Radio Alliance) is cutting back on its multicasting services by a whopping 86%. So the search for a killer application has turned, toward pay-radio (otherwise known as “conditional access“) or datacasting (like the provision of real-time traffic and weather information). With regard to the former, it doesn’t seem like anybody in the radio industry has any idea how to make programming worth charging listeners for directly; as for the latter, some companies, such as Microsoft, which had originally pledged to work with iBiquity to develop an HD traffic-casting system, are backing away from the idea.
5. Even those listeners who want to experience HD Radio are underwhelmed. This very telling blog post from a radio aficionado speaks volumes about the technological maturity of the receiver-side of the HD system. The money quote, for me: “The radio runs very hot; I’ve heard those Ibiquity chips suck power and that’s why you’re not seeing a walkman HD radio yet. (And that’s also why you’ll probably never see HD radio in a cell phone.)”
The number of alternative mediums by which listeners can now receive “radio” is growing. Some, like 3G cellular telephony, wireless broadband, and USB ports in the dashboards of vehicles are sucking listeners away from radio. HD is certainly not helping matters – and, in certain respects, is already an also-ran to the above alternatives. If the new FCC is serious about saving radio, it will seriously review the HD protocol and consider viable alternatives.