Clear Choice: Hi-Def Radio

Terrestrial broadcasters have a new weapon to keep listeners from defecting to satellite radio: high-definition digital radio. Now broadcast on close to 1,000 U.S. stations, HD Radio promises to bring CD-quality sound to FM and FM-like clarity to AM.

Digital technology lets broadcasters send multiple channels over the same frequency, delivering more channels to FM. In addition, stations will be able to use spare HD bandwidth to stream weather and traffic reports across radio text displays.

"Multicasting" may be a draw in the future, but for now HD Radio's biggest plus is its improved audio quality -- and free broadcasts. Satellite-based rivals Sirius and XM charge about $13 per month for well over 100 digital channels of music, news, sports and talk. With HD, you get local stations and a multicast (HD2) channel or two.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

But just as with satellite radio, you'll need to spring for new hardware. An HD receiver for a car goes from $200 to more than $1,000, while a quality tabletop HD home model runs $270 to $600. Of course, HD Radio also comes in some home receivers and other audio equipment. Walkman-size receivers aren't practical yet because HD Radio needs more power than batteries can provide.

We tested the Boston Acoustics Recepter Radio HD ($300), a compact desktop unit with one built-in speaker and a separate speaker for stereo sound. HD FM clarity was excellent. We'd rate it as near-CD quality, but your experience will vary based on several factors, including terrain (hills wreak havoc on FM reception) and distance from the station's FM transmitter. HD AM was far clearer than its creaky analog ancestor, and without the cracks and pops that annoyed even your great-grandfather. As the song says, no static at all. Another plus: HD radios display song titles and artist names, a cool feature that was made popular by satellite receivers.

Most people listen to the radio in their cars, not at home. Only BMW currently offers a factory-installed HD option. The aftermarket business is more competitive and includes players such as Alpine, JVC, Kenwood, Panasonic and Sanyo.

Although HD Radio is advertised as the free alternative to satellite, that could change. Broadcasters may feel compelled to reap profits from HD, which could mean subscription-based channels, pay-per-listen events or additional fees for stations with enhanced audio.