With Digital TV slowly on it's way in, it was only a matter of time before Digital Radio (or HD Radio) was next.  Although I suspect the HD Radio rollout will go a lot smoother and quicker than the HDTV rollout.

WASHINGTON (Reuters) - Federal regulators on Thursday approved a new technology for offering digital radio service, one of the biggest upgrades in decades in sound quality and choice of stations and a challenge to the growing pay-satellite radio services.

The Federal Communications Commission approved at its regular monthly open meeting the technology for the digital radio service developed by iBiquity Digital Corp., a privately held firm backed by many of the biggest radio broadcasters.

"The beauty of digital is it always has the potential to provide better services for consumers with more efficient use of the spectrum," said FCC Chairman Michael Powell.

Consumers will eventually have to buy new radios, which are not expected to be on the market until next year, and stations will have to upgrade their transmitting equipment, at an average cost of about $75,000, according to iBiquity.

Once rolled out, iBiquity boasts that FM radio signals will be upgraded to the sound quality similar to compact discs and AM radio will have sound quality equivalent to FM.

Part of the iBiquity technology will allow broadcasters a separate stream within the existing spectrum they use to offer other services and applications, like weather or traffic data as well as news and stock quotes.

"We believe broadcasters will embrace this new technology because it will provide local listeners with unmatched audio quality and a host of new, innovative digitally-based services," said Edward Fritts, president and chief executive of the National Association of Broadcasters.

Clear Channel Communications Inc. with some 1,200 stations, Viacom Inc.'s Infinity Broadcasting with more than 185 stations, and Walt Disney Co.'s ABC Radio network with about 230 affiliate stations, are some of the backers of iBiquity.

On a conference call with media and analysts after the approval, iBiquity Chief Executive Bob Struble said the decision was the culmination of 10 years and $100 million worth of effort.

He said broadcasts using the company's standard, to which it has attached the consumer brand "HD Radio," will begin this year in Los Angeles, Chicago, New York, San Francisco, Seattle and Miami, as the actual rollout of radios is awaited.

The company's goal is to have a total of 70 stations equipped by year's-end, though Struble conceded something in the range of 30 to 50 stations is more likely.

"I don't honestly believe, given where we are in the year and the manufacturing cycle, that we'll get to 70," he said.

One key partner is Ford Motor Co., the world's No. 2 automaker which will offer a pipeline to the one place where most people listen to the radio: in their car.

Over-the-air radio broadcasters have been challenged in recent months by the launch of two satellite radio services, Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., which have won a few hundred thousand subscribers since launching service in the last 12 months.

The two services charge about $10 to $13 a month offering some 100 channels ranging from music, talk and sports programming, with the radios costing about $200 and up. Numerous automakers have been offering the satellite service as a new option.

Struble said after-market radios would be about $100 more than traditional analog radios initially, though that differential is expected to fall by half every year.