It's been three years since satellite radio launched with the promise of a whole new way of listening to radio: commercial-free music formats for just about every musical taste, a diverse spectrum of news and talk programming, crisp digital sound and consistent reception from coast to coast.

Listeners haven't tuned in the new technology in a big way, but the number of subscribers is growing steadily. Combined with the growth of online listening and Internet radio stations, the world of broadcasting is changing.

The turf battle for minds and ears began with the launch of Sirius Satellite Radio and XM Satellite Radio. Both companies offer satellite radio subscription services (XM for $9.99 a month, Sirius for $12.95 a month with an extra three months' worth of free service added). Both are available across the nation, except in Alaska and Hawaii. Both offer 100-plus channels of music, news/talk and speciality programming.

Since XM debuted in 2001 and Sirius in 2002, the services have grown, especially toward the end of last year. XM has more than 1.68 million subscribers, adding 320,000 new ones in the first quarter of this year. The company is projecting 2.8 million subscribers by the end of the year. As of the first quarter of 2004, Sirius had 351,000 subscribers, up from 261,000 at the end of 2003, and is projecting 1 million by the end of this year.

Neither company breaks out subscribers by market, so figures aren't available for how many there are in the Pittsburgh area.

Most satellite listeners tune in while driving; around half get the service when they buy a new car. GM offers XM receivers on more than 40 of its vehicle models and will offer them on all of its 2005 models. Subscribers can also buy units at retailers and install them. New plug-and-play units move from car to home stereo to boombox.

Industry analysts are projecting dramatic growth for satellite -- 16 million to 25 million satellite subscribers in the next five years.

While both companies have been losing money, both project that 2005 will be their break-even year. Anyone who bought stock early on has a reason to smile: The value of shares of both XM and Sirius stock are up dramatically.

Still, satellite has a way to go. Some people resist the idea of having to buy a new receiver or are unwilling to pay a monthly fee when they can listen to commercial radio for free.

In a recent Arbitron and Edison Research survey of in-car listening, satellite trails the pack of new technologies competing for the attention of drivers and passengers. The survey showed that Americans spend about 15 hours a week in the car, and that commute times have increased. Since 1999, listening to radio has decreased at home and at work but increased in vehicles.

Radio still rules as the entertainment medium of choice in cars, among 96 percent of the respondents. Another 58 percent said they use a CD player while driving, followed by cell phones (55 percent) and cassette players (47 percent). Newer technologies are distinctly in the minority: DVDs (6 percent) and mp3 players (3 percent). Satellite radio is dead last, with 1 percent.

The study concluded: "Early in its growth curve, satellite radio awareness has not necessarily translated into mass subscription, as only approximately 1 percent of Americans indicate they subscribe to either service. However, as availability of the service in new cars grows, subscription rates could accelerate."

Listeners dissatisfied with radio

While satellite doesn't pose an immediate threat to commercial radio, "There's definitely something happening with mainstream radio," says Sean Ross, vice president of music and programming for Edison Media Research. Listening levels have been on the decline for years. "Listener dissatisfaction has finally become something tangible and harder for many stations to dismiss."

Given the smorgasbord of musical offerings on satellite channels, will mainstream commercial radio change its tune? In some ways, it already has, Ross believes. "We're starting to see a groundswell of classic rock stations with deeper play lists, hot AC stations that play 1,000 songs instead of 300, and smaller niches. ... It's hard to say whether this is a reaction to satellite or, just as likely, a reflection of a world in which a 3-share niche no longer looks that bad."

For mainstream broadcasters, the formula for success is, to paraphrase the old real estate adage, "Local, local, local."

Satellite is "Essentially a jukebox that doesn't identify with any local community," says Keith Clark, vice president of programming for Infinity Pittsburgh. "The key for traditional broadcasters is to be local in everything. I don't think that's something satellite will ever figure out how to do."

Infinity's Pittsburgh stations have not expanded play lists on contemporary hits WBZZ-FM, Hot AC WZPT-FM and country WDSY-FM, as others have in other markets Ross referred to. Given the size of satellite's audience, it's way too soon to do that, Clark says. "We have to find out as we go forward who is going to be interested in satellite radio and what they're interested in. They may have 120 channels, but my guess is people don't care about half of those channels. It's hard to create mass appeal programming for that many channels."

When satellite entered the competitive arena, mainstream broadcasters said they weren't concerned about the new competitor because it couldn't offer listeners the local information connection that terrestrial radio stations can -- news, traffic, sports, local personalities.

But in the past few months, both Sirius and XM introduced channels dedicated to 24/7 traffic and weather reports in select markets -- Pittsburgh among them. Now satellite listeners who had to tune out their favorite music to get a traffic report can do so without switching back to commercial radio. Traffic is a top priority for people who listen to radio in their cars, and the traffic channels offer constant, detailed information, says XM spokesman David Butler: "Drivers are not confined to 30-second reports."

The National Association of Broadcasters has vigorously opposed any attempts by satellite companies to create local programming, maintaining that the FCC authorized satellite as a national radio service only. NAB has endorsed a bill introduced in Congress last month designed to protect commercial radio's local turf. "Localism is the hallmark of our free, over-the-air radio system," said NAB president and CEO Edward O. Fritts. "This bill will ensure that satellite companies be held to the standard upon which their licenses were granted." NAB objects to the recently introduced local traffic and weather channels.

The broadcasting company Entercom has been airing a series of anti-satellite radio commercials in markets where it has stations.

Top 40, classic rock in demand

What's a hit on satellite radio so far? The most popular programs on Sirius mirror what's most popular on mainstream radio: Top 40 and classic rock channels. That came as a surprise, even to Sirius, says Sirius spokesman Ron Rod-rigues. "When the founding fathers started the company, they thought the niche-oriented channels would be the most popular." As it turns out, he says, "People are attached to their hits. But they like the fact that we put them on commercial-free."

At XM, it seems to be the more narrow-cast programs. Favorites include "Hank's Place," which plays traditional country music like Hank Williams Sr., George Jones and Johnny Cash, and "XM Cafe," a mix of alternative rock and adult alternative, along with new artists.

"We have channels that appeal to fans of music that is very popular but difficult for commercial radio to support, like blues," Butler says. "Because we broadcast coast to coast, we have the ability to do so."

Popular radio formats are also drawing XM listeners. The hits channel "20 on 20" features a top 20 play list chosen by the listeners.

Both companies are enhancing their programming and expanding their services. Next month, Sirius music channels will become the music service on Dish Network, exposing a whole new audience of satellite TV subscribers to its music.

Sirius will broadcast NFL games this fall, enabling fans to tune in their local hometown broadcasts even if they live in other cities. Sirius will also debut a garage rock channel programmed by Steven Van Zandt, along with a channel programmed by and for women.

XM will launch a real-time traffic information service for vehicle navigation systems. XM NavTraffic will offer information on how fast traffic is moving and pinpoint accidents, backups and construction areas.

So far, it seems, subscribers like what they hear. "Seventy-five percent of listeners have told us they've discovered an artist or genre they knew nothing about," says XM's Butler. "That's an integral part of our mission."