I posted this comment:
Your observations about the strange disconnect between industry spin and the realities HD radio is facing are all correct, but you politely stop short of the obvious conclusion: HD is DOA.
The only reason it has gotten this far is that such an amazing amount of time and money has been invested in it by iBiquity, with support from radio industry stakeholders and receiver manufacturers.
Many radio folk were skeptical from the beginning. Promoting HD as a quality upgrade (source of the HD moniker) was obviously bull — the typical Internet music stream is already higher quality than HD and can be upgraded easily as deliverable bandwidth gets cheaper. HD reminds me of DCC (Digital Compact Cassette), another attempt by a mature industry to administer life support to a sunset format. That didn't work either, and today almost no one even remembers it.
Promoting the increase in channels on HD sounded good until the usage reports came in and it became clear that with an IBOC system there really wasn't enough additional bandwidth on AM and FM to do the job properly. The U.S. really needed microwave digital radio spectrum like they got in Europe, so new radios could simply add a band. And nobody really figured out where the money would come from to staff and operate those new channels at an effective level, even if they actually worked technically.
And then there was the little matter of the hardware upgrade...it might have had a shot if the Internet wasn't evolving several orders of magnitude faster, the FCC approval happened three times faster, the manufacturers were more agile, and the public had a clear reason to do it. But of course none of these conditions were met and today we still have the ~$500 standalone HD radio and the ~$250 upgrade fee for a new car radio.
Of the major usage trends that are driving the growth of Internet radio -- new "long tail" niche and alternative content, on-demand delivery, user-created content, podcasting (subcriptions and portability), and time-shifting -- only time-shifting is even doable with HD, and then only in a relatively crippled way due to memory and interface constraints. Even this undermines the one incontestable advantage of conventional radio: ease of use.
Your observation that HD is "distracting broadcasters from focusing on obvious web opportunities" is also true but only partially. Pumping up the station workflow to produce multiple audio streams and additional content is worthwhile whether the output is HD or web; and learning how to use the legacy air channel to promote web features and services is already being done by many stations with varying degrees of success.
I work mainly in Public Radio, where these issues have been conscientiously debated for the last five years, while progress in both HD and web delivery has been (with conspicuous exceptions like NPR.org, KCRW Santa Monica and handful of other large stations) painfully slow and scattered.
But system thought leaders and power players are finally united in the realization that digital delivery will happen most powerfully online and will do a far better job of supporting the underlying public service mission of the industry. They are now actively working on a comprehensive plan to do it by aggregating both infrastructure and content to support emerging composite business models. These will include memberships, underwriting, grants, and paid services with a sophisticated revenue-sharing model that involves all the participants and gives a powerful new role to the stations, who would otherwise face slow, painful dis-intermediation.
Sound familiar? Commercial broadcasters actually have the greater distance to go in unlearning the old rules of the road and meeting the challenge of the digital transition. The process is retarded by the understandable imperative to operate their current franchises until the last dollar is earned. Public broadcasters have only their survival at stake, not billions of dollars of sunset ad revenue.