In-band on-channel is a method of transmitting digital and analog radio broadcast signals simultaneously on the same frequency. By utilizing a subcarrier, digital information is "piggybacked" on a normal AM or FM analog signal, thus avoiding any complicated extra frequency assignments. However, by putting extra RF energy toward the edge of the station's channel, interference with adjacent channel stations is increased. This is especially so if the FM station chooses to continue using part of its bandwidth for analog stereo, decreasing the amount available to (and therefore the audio quality of) the digital signal.
While Canada and most countries in Europe have chosen the Eureka 147 standard for creating digital radio service, the United States has been holding out for advancements in IBOC technology, now under the direction of Ibiquity. Part of the reason is the use of the L band (1452~1492MHz) for test-flight telemetry, by the U.S. military and its contractors. This band is used in Canada for digital radio, but remains unavailable for reassignment by the NTIA in the U.S. for broadcasting. It is also partly because of concern that stations' branding, using their current frequency, would be lost to new channel numbers — and that several stations must share a transmitter which multiplexes them all into one ensemble with the same coverage area. A further concern to FM stations was that AM stations could suddenly be in competition with the same high audio quality.
IBOC in the U.S. still faces some serious technological challenges of its own, including interference to other stations, and poor audio quality likened by some to that of being underwater. Ibiquity was previously using PAC (also used at a higher bitrate in Sirius satellite radio [see DARS]), but as of 2003 August 12 a switch to HDC was made to rectify these problems. Prior to this, a change back to AAC or another MPEG compression algorithm had been considered; however HDC has been customized for IBOC, and it is also likely that the patent rights for every transmitter and receiver can be retained longer by creating a more proprietary system. Digital Radio Mondiale is also developing a patent-free IBOC system, likely to be used worldwide with AM shortwave radio, and possibly with broadcast AM and FM.