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HD Radio Propels Broadcaster Forecast

According to Kagan Research, terrestrial broadcasters are shifting their rollout of high definition radio into high gear, although they still are sorting through four different business options. Analog radio broadcasters will likely divide their digital spectrum � HD radio � into a mixture of these businesses:

� Multicasting offers broadcast-like channels in the option that most closely emulates the current analog broadcast business model.

� Advertising supported "now" channels can be created to offer highly-formatted local information such as all-the-time weather reports, all sports, all traffic or all local news.

� Datacasting typically involves leasing spectrum to third parties.

� Fee-based radio could be offered on a monthly subscription basis.

Kagan Research presents the following hypothetical model a radio broadcaster could use for each block of 150Kb of digital capacity. The analog broadcaster could allocate 55Kb for an HD version of its flagship analog music channel, 55Kb for a new companion music channel, 12Kb for a Now channel, 8Kb for datacasting and 2Kb for a subscription channel for a local traffic report channel. That would leave 18Kb available for later uses.

By 2008, Kagan Research forecasts that U.S. terrestrial radio broadcasters will be earning 4 percent, or $805.2 mil., of their total revenue from HD radio. "The future is still taking shape," says Michael Buckley, associate analyst at Kagan Research. "In some cases, the infrastructure and business models needed to leverage the new technology require further development."

Eight big terrestrial radio broadcasters unveiled the HD Digital Radio Alliance to promote sales of radio receivers and build consumer awareness for HD radio broadcasts. Only an estimated 100,000 HD radios were in the hands of consumers at the end of 2005.

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