I know that after the recent FCC fiasco regarding HD Radio, most people would have a gut reaction that it would be bad for Sirius XM. For some reason, this was not my gut reaction at all. It all started when I read a news article regarding increased HD penetration at the OEM level.

As I've written time and time again, HD Radio is not High Definition radio but is in fact Hybrid Digital radio. Although according to iBiquity, the name "HD Radio" is simply the company's brand for its digital radio technology, and does not stand for "Hybrid Digital" or "High Definition" as commonly believed. Regardless, the difference is clear. Literally!

Let's assume for a moment that HD Radio achieves 100% penetration in the OEM channels. Who will suffer the most? The answer is actually not Sirius XM but rather terrestrial radio and those stations that have not made the changeover to the digital format. Once people listen to radio in a digital format it will be just as impossible to return to standard AM/FM broadcasts as it is now for subscribers of Satellite radio. It would be like returning to rabbit ears on a television.

Taking it a step further, as more and more people realize the superior sound quality of digital broadcasting, the more likely it becomes that many would opt for the Satellite version without the constant commercials that plague terrestrial radio today, the superior content and the end of signal drops as a result of being out of range.

Problems continue to plague HD Radio and the infrastructure is not where it needs to be to make it a viable service, offering still another reason to suggest that Sirius XM will be the beneficiary of this now rushed to market product.

iBiquity Digital claims that the system approaches CD quality sound and offers reduction of both interference and static; however, some listeners have complained of increased interference on the AM band. WYSL owner Bob Savage, arguably the most vocal opponent of HD Radio technology on the AM band, filed a complaint against WBZ in Boston. WBZ (a 50,000 watt station on the 1030 kHz frequency), Savage alleges, was causing interference to Savage's 500 watt night signal at 1040 kHz.

When the complaints start rolling into the dealership service departments, surely one suggestion from service advisers will be to switch to Satellite Radio. Ironically, the end of terrestrial radio may come at the hand of terrestrial radio itself.

Position: Long SIRI