The jury is out on digital radio.

There's little agreement among broadcasters about the future of the format, a crystal-clear signal broadcast across the digital spectrum. Supporters at CHUM Ltd. describe digital radio as potentially the next big thing set to revolutionize the way Canadians listen to music.

Meanwhile, the head of Standard Broadcasting Corp. Ltd. is reluctant to broadcast in the new band because "Nobody is listening."

The rollout of digital services has divided the industry. Incumbents — including CHUM and Rogers Communications Inc. — are the most vocal supporters of the new technology.

At the same time, there's a growing chorus of critics wondering whether the industry has backed the wrong horse in the race to secure their position in radio's future. The bottom line is digital radio faces some enormous obstacles and its future is less than secure.

"The CBC, at one point, was convinced this was the future for radio. Our position has become this may be the future or it may be one of a number of alternatives how people may receive radio in the future," says Philip Savage, senior manager of regulatory affairs for the public broadcaster's English-language services.

He says he would be surprised if there were more than 500 people listening to the CBC's four digital stations in Toronto.

"We're not backing off on our commitment to digital radio in any way but we're not going to be investing huge amounts in this and wasting taxpayers' money until we have actually seen some further consumer acceptance."

Digital radio or digital audio broadcasting (DAB) has had a brief and troubled history. DAB was first developed with an eye to commercial use in the late 1980s. Via a digital radio technology called Eureka 147, broadcasters can transmit a complex signal with many potential applications, not the least of which is a crystal-clear sound. As CD-quality music plays, a radio display will show the song title and artist. Press a button and you can order the CD. Press another and you can order concert tickets. Stations can be personalized according to a listener's needs with the latest weather, traffic or stock market quotes available upon request.

DAB is key to radio's "survivalist strategy of the future," says Duff Roman, CHUM's vice-president of industry affairs and digital radio operations. Radio is the last non-digital electronic medium and must embrace the growing consumer taste for the digital world, the veteran Toronto disc jockey says.

"People are saying 'Jeez, I got to get this thing.' That's the reaction I'm getting from my 13 year old and his gang," Mr. Roman says.

The federal broadcasting regulator agreed and, in 1995, released a policy for the introduction of digital radio. The Canadian Radio-television and Telecommunications Commission "foresees digital radio services as coming to replace existing AM and FM services over time," setting the framework for incumbent players to access the L-band, a valuable chunk of digital spectrum set aside by Industry Canada.

The past seven years have seen steady but unremarkable growth. At present, there are about 57 AM and FM stations simulcasting their signals in digital formats in four cities: Toronto, Montreal, Vancouver and, in a failed attempt to persuade Detroit's auto makers to install digital receivers in new cars, Windsor, Ont. Another 16 Ottawa stations are expected to go digital next year.

To launch services with a single digital transmitter costs about $40,000 per radio station. To blanket an entire city with eight digital transmitters costs about $300,000 per station.

While Europe's major broadcasters embraced Eureka 147, it was a very different story in the United States. Concern that a new dedicated digital band would undermine the value of FM stations prompted the United States to support a made-in-America compromise called IBOC (in band/on channel). The IBOC plan requires no new spectrum and squeezes new digital signals within the existing FM and AM radio bands. IBOC, recently rechristened HD Radio, was approved by the U.S. Federal Communications Commission in October and has the support of 14 of the country's top 20 radio broadcasters.

HD Radio has been met with much hostility by Canadian supporters of Eureka 147. They claim the U.S. plan will mean an inferior digital radio signal for the world's largest commercial audience.

"You're left with the conclusion why did they [U.S. broadcasters] bother? They ended up with a system that isn't particularly useful," says Steve Edwards, vice-president of corporate engineering and technology at Rogers Media, a unit of Toronto holding company Rogers Communications Inc.

More important, HD Radio has created a major stumbling block for the growth of Eureka 147. The two formats are not compatible and require separate digital receivers. To date, consumer demand in Canada for costly digital radio equipment has been "virtually non-existent," says Michael Nedelec, vice-president of consumer electronics and appliances at Future Shop, a Burnaby, B.C.-based subsidiary of Best Buy Inc.

"It's extremely doubtful at this time whether DAB will take off in Canada," Mr. Nedelec says.

Broadcasters are resting their hopes on a single retailer, InterTan Inc., the Barrie, Ont.-based parent of Radio Shack. In November, about 250 stores in digital-radio-serviced cities began offering a $299 digital receiver and a $399 model with a built-in MP3 player.

"We knew out of the gate there wouldn't be huge demand," says Bill Bishop, senior audio buyer for InterTan. Like many across the industry, he equates digital radio's current status to the "chicken-and-egg thing" — few digital radio stations means few receivers and vice versa.

Complicating matters further is the emergence of competing technologies. In the United States, Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. have each quickly built an impressive base of subscribers willing to pay a monthly fee to listen to commercial-free radio. These satellite radio rivals have lost millions in the process and the business case has yet to be proven.

At the same time, Internet radio has built a strong following, especially among a hard-to-reach youth audience that is attractive to advertisers. Many AM and FM stations simulcast on the Net, but a money-making stand-alone Internet radio format remains elusive.

"When this [digital radio] all started, there was no Internet. There were no kids on computers listening to the radio and downloading files. It wasn't happening then and it's happening now. I think we maybe missed the boat," says Gary Slaight, president and chief executive officer of Standard Broadcasting.

Mr. Slaight, an investor in on-line radio services, is the industry's most vocal critic of digital radio.

"Before we spend millions and millions of dollars as an industry . . . let's make sure we're not going to be sitting here in two years saying 'This is a stupid thing to do, nobody is really interested in it.' "

The CRTC is watching events closely. There is no time frame for the industry's largest players to launch digital services, but sources report there is an increasing "use it or lose it" view of rights to the L-band spectrum within the commission and Industry Canada. In September, the CRTC heard for the first time Toronto applications from prospective broadcasters interested in launching stand-alone digital radio services.

Supporters are quick to compare digital radio's slow birth to FM, a band that took about 30 years to capture the public's imagination.

"My glib answer is it takes as long as it takes," says CHUM's Mr. Roman. "There's a whole sort of inertia that we have got to deal with. . . . If you tell people about DAB, their first reaction is to find a way of getting out of it rather that making a commitment. You have to break that down."