Volvo To Offer HD Radio In Most Vehicles Next Fall

It has been two years since Clear Channel and Infinity Entertainment, among others, formed the HD Digital Radio Alliance, and Clear Channel started airing HD broadcasts on 200 of its radio stations.

Now Volvo will join BMW, Ford, Jaguar and Hyundai in offering HD radios as original equipment in their vehicles. Volvo will be the first to offer it as original equipment in most of its vehicles, starting next fall.

According to a spokesperson at the HD Digital Radio Alliance, there are currently over 1,500 AM and FM stations channeling HD digital broadcasts, with 700 offering subscription-free HD2 multicast channels on the FM dial.

Rather like satellite radio, the HD radio receiver display screens can show song information, traffic and weather news and alerts. But HD radio is free, while satellite is by subscription.

The HD Digital Radio Alliance, which launched an 85-market ad push in February this year to promote BMW's program, also donated $450 million in free on-air advertising to retailers, automakers, and manufacturers selling HD receivers or marketing them as optional equipment, noted the spokesperson.

On Oct. 15, the group renewed that charter another year, with the alliance donating $230 million in on-air advertising, totaling $680 million, for those advertising HD equipment.

"Free on-air advertising is an incentive for retailers like Wal-Mart to carry the equipment," he says.

There are nine broadcasters, including CBS and Clear Channel, who are part of the alliance. The company that makes the HD technology for broadcasters, iBiquity*, predicts that 2007 will see some 500,000 of the units sold in the U.S.

Jesse Toprak, executive director of industry analysis at Edmunds.com, says the main issue for HD radio is simply that most people don't know what it is. "There's a lot of marketing that needs to be done--that it is free radio with better reception and more depth," he says. "Now is actually one of the better times to listen because broadcasters have not yet begun adding a lot of commercials."

Toprak says that the feature is unlikely to sell consumers on a car, the way satellite radio, in some cases, has done. "Basically, it's terrestrial radio's answer to satellite. It's not a deal-closer at this point; HD is not a compelling enough argument."

Instead, the new technology will phase out FM. "It's kind of like HD TV; once you see that, you won't go back. It will take some time, but I don't see it as an answer to satellite radio. It's the last attempt of terrestrial to get more attention back."

*Editor's note: The article was amended post-publication.

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