Internet Radio vs. Licensed Broadcast Radio: A Comparison

The distinction between internet radio and licensed broadcast radio carries significant regulatory, financial, and operational weight for anyone entering or analyzing the audio media landscape. These two distribution models differ not only in the technology that carries audio signals but in the legal frameworks governing their operation, the licensing obligations each carries, and the audiences each can realistically reach. Understanding where the models converge and diverge is essential for engineers, station operators, programmers, and policy analysts alike. A fuller overview of the radio broadcast landscape is available on the Radio Broadcast Authority homepage.

Definition and scope

Licensed broadcast radio refers to AM and FM stations — and their digital HD Radio variants — authorized by the Federal Communications Commission (FCC) to transmit on designated frequencies within the electromagnetic spectrum. A license grants the holder the exclusive right to use a specific frequency in a defined geographic coverage area. The FCC issues two primary license classes for terrestrial stations: commercial and noncommercial educational (NCE). Each class carries distinct rules for content, ownership, and public interest obligations under Title 47 of the U.S. Code and the rules codified in 47 C.F.R. Part 73.

Internet radio — also referred to as webcasting or streaming audio — delivers audio content over broadband networks without using licensed radio-frequency spectrum. No FCC broadcast license is required to operate an internet radio service. However, internet radio operators are subject to copyright obligations governed by the Digital Millennium Copyright Act (DMCA) of 1998 and must obtain statutory licenses for sound recordings through the Copyright Royalty Board (CRB), which sets rates for the SoundExchange royalty system.

The scope difference is geographic: a licensed FM station's signal typically covers a radius of 15 to 70 miles depending on its class and effective radiated power (ERP), whereas an internet stream is accessible globally wherever broadband connectivity exists.

How it works

Licensed broadcast radio operates through a chain of regulated technical steps:

  1. Frequency assignment: The FCC allots specific frequencies to communities based on engineering standards documented in the Table of Allotments (47 C.F.R. Part 73, Subpart B for FM). Frequencies are separated by minimum spacing rules to prevent interference.
  2. Construction permit: Before a station can transmit, the FCC issues a construction permit (CP) authorizing the build-out of transmitter facilities. The permitting framework for radio broadcast stations details the CP process.
  3. Licensed transmission: A station operates its transmitter at FCC-authorized power levels from an approved tower and antenna configuration. Engineers must comply with antenna height above average terrain (HAAT) limits and maximum ERP ceilings set per station class.
  4. License renewal: Broadcast licenses run on 8-year terms and must be renewed through the FCC, with stations demonstrating continued compliance with public interest obligations (47 C.F.R. § 73.3539).

Internet radio operates through a separate set of mechanisms:

  1. Audio encoding: Audio is digitized and compressed using codecs such as MP3, AAC, or Ogg Vorbis, typically at bitrates from 64 kbps to 320 kbps.
  2. Streaming infrastructure: Content is delivered through a content delivery network (CDN) or streaming server, with listener capacity scaling based on server bandwidth.
  3. Royalty licensing: Internet-only webcasters must pay per-performance royalties to SoundExchange under rates set by the CRB. The CRB's Web IV and subsequent rulemakings established tiered rates for noninteractive and interactive streams. As of the rates established under the CRB's 2021–2025 determination, small webcasters face distinct rate structures from large commercial operators (Copyright Royalty Board, 86 Fed. Reg. 59452).
  4. ASCAP/BMI/SESAC licensing: Internet radio operators, like broadcast stations, must also license the underlying musical compositions through performing rights organizations (PROs) such as ASCAP, BMI, and SESAC separately from SoundExchange.

Common scenarios

Scenario 1 — Community broadcaster with local public interest goals: A nonprofit seeking to serve a defined geographic community will typically pursue an FM or Low Power FM (LPFM) license. The FCC's LPFM service, created under 47 C.F.R. Part 73, Subpart G, permits noncommercial stations operating at a maximum of 100 watts ERP, covering roughly a 3.5-mile radius. LPFM stations cannot simulcast on a co-owned AM or FM station, and must maintain a locally originating programming requirement.

Scenario 2 — Music-focused operator with national reach ambitions: An operator prioritizing catalog-driven music programming for a dispersed, non-geographically-defined audience may find internet radio more practical. The absence of spectrum scarcity means no filing window or licensing lottery, though SoundExchange royalty obligations can represent a substantial operating cost — particularly for streams that attract large concurrent listener counts.

Scenario 3 — Existing licensed station adding a stream: The majority of licensed commercial and public radio stations now simulcast or offer supplemental programming via internet streams. These stations hold both an FCC broadcast license and pay SoundExchange royalties on the web-delivered audio separately from their over-the-air obligations. The regulatory context for radio broadcasting covers how dual-distribution obligations interact.

Scenario 4 — Podcaster entering live audio: A podcast producer moving into live, scheduled programming must decide whether to pursue FCC licensure or remain in the internet distribution environment. Podcasts delivered on-demand are not subject to FCC content rules; live internet streams are similarly unregulated by the FCC for content but remain subject to CRB royalty obligations for music.

Decision boundaries

Choosing between internet radio and licensed broadcast radio turns on four concrete factors:

1. Geographic targeting vs. open-access reach
Licensed broadcast radio delivers a guaranteed, spectrum-protected signal to a defined area without requiring listeners to have internet connectivity. This gives terrestrial stations a structural advantage in emergency communication scenarios — a role formalized through mandatory participation in the Emergency Alert System (EAS) under 47 C.F.R. Part 11. Internet radio streams are not subject to EAS mandates.

2. Spectrum availability and licensing barriers
FCC broadcast licenses are finite. FM frequencies in major metropolitan markets are fully allocated. An applicant cannot simply apply for an FM license in New York City — the Table of Allotments contains no available allotments. Internet radio carries no comparable spectrum constraint.

3. Royalty structure and cost basis
Licensed broadcast stations pay performance royalties to ASCAP, BMI, and SESAC for musical compositions but historically were exempt from paying sound recording performance royalties to SoundExchange for over-the-air broadcasts — an exemption codified in 17 U.S.C. § 114(d)(1)(A). Internet radio operators pay both composition royalties to PROs and sound recording royalties to SoundExchange. This asymmetry materially affects music-intensive formats operated by internet-only services.

4. Regulatory compliance load
FCC-licensed stations carry obligations absent from internet radio: EEO reporting under 47 C.F.R. Part 73, Subpart H, public inspection file maintenance (47 C.F.R. § 73.3526), political broadcasting equal time provisions under 47 U.S.C. § 315, indecency rules, and license renewal filings. Internet-only operators face no FCC content oversight, though they remain subject to FTC truth-in-advertising rules and state-level consumer protection law.

The two models are not mutually exclusive — licensed broadcast stations routinely add internet streams, and internet radio operators sometimes acquire broadcast licenses to establish terrestrial presence. The path chosen depends on the operator's geographic mandate, capital position, music royalty exposure, and tolerance for FCC compliance obligations.

References

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