What is HD Radio?
Over
the last 15 years, media consumers (that's all of us) have come to
expect a higher level of performance in every audio experience. HD Radio
is broadcast radio's chance to achieve that level of sound quality.
Basically, HD Radio improves the sound of both AM and FM radio signals
by transmitting them in digital format, rather than the analog format used for the last 100 years or so.
The digital format of HD Radio technology gives normal terrestrial (as opposed to satellite - see "How did we get here?") substantial benefits, including:
- Near cd-quality sound on FM stations
FM quality sound on AM stations
Eliminates static, pops and other signal noise
Allows transmission of additional textual content that can include virtually anything; song titles, artists, stock ticker...
The ability to deliver multiple separate stations over the same 'channel', called multicasting
'Tagging' a song for later purchase via iTunes.
HD Radio Improves Sound Quality
Anyone who's listened to a cassette recording knows the incredible difference digital delivery can make in sound quality. Basically, digital technology means that radio stations can pack much more information into the same signal width that analog systems use. That extra information can be used in a number of ways.

Primarily, HD Radio can result in significantly increased sound quality in both AM and FM signals. For FM stations, the difference is profound, providing near CD quality sound. AM signals use a smaller bandwidth than FM stations, so there is not enough extra room for CD quality sound. However, AM stations can routinely perform as well a current analog FM stations, making AM a viable alternative to FM stations and offering listeners more options.
The digital signals from HD Radio
stations are much less prone to reception problems (see HD Radio
Paranoia for more about that). HD Radio tuner's include digital signal
processors that eliminate background and transmission noise as the
digital signals are decoded. These digital processors also selectively
filter out duplicate or out-of-phase signals that result from
reflecting signals off of buildings and surrounding obstructions. The
result is clear, rich sound
HD Radio Increases Listening Options
One very promising aspect to HD Radio is the ability to 'split' or subdivide the digital portion of the signal. This allows stations to broadcast multiple programs over the same signal space, a technique called "multicasting". This means that a single radio station can provide multiple programming alternatives. A jazz station, for example, could simultaneously offer classical music or blues on a separate channel within the same frequency. With this "multicasting" capability, HD Radio consumers have more choices than could ever be offered by satellite or internet radio.
All HD Radio is Local
Like politics, all HD Radio programming is local. Like to listen to your local teams play ball? With HD Radio, stations can give you direct feeds of the game accompanies by stats on a ticker that displays on your radio screen. Like a particular music genre? WIth HD Radio, stations can broadcast both their regular programming and additional, in-depth programming. WMGK (102.9 in Philadelphia) for example, is a great classic rock station that plays Deep Tracks commercial free on their HD 2 channel, including songs that would never make a standard playlist.
This point can't be emphasized enough. I've been an XM subscriber for a number of years, and while the music programming is typically pretty good (what's with all the Rush? Who listens to that?), there is just no substitute for local traffic and news on your commute.