TWST: Why don't we start off with a background and a quick overview of iBiquity please?

Mr. Struble: Sure. iBiquity was formed in the early 90s, actually a predecessor company by the large radio broadcasters. The basic premise of the company is that AM and FM radio will not remain the only analog medium in a world that's fully digital. Everything else has already gone digital -- cell phones, cameras, DVDs, CDs, and now television. We are the company that was set up by large radio broadcasters to transition AM and FM radio to digital in a way that made sense for the broadcasters and made sense for their listeners. So we count among our investors every one of the top-12 radio broadcasters, that's Viacom, Clear Channel, Cox, ABC, Disney, Entercom, Radio One down the line, as well as such companies as Ford, Texas Instruments, and several VC's. But essentially, we were set up to come up with a way to transition AM and FM radio from analog to digital broadcasting. The technology we've developed to do that is branded HD Radio, and it does a lot of great things. As you've seen with a lot of the other consumer products, digital is just better than analog. It means more quality, more interactivity, more choice, and you will now get that with HD Radio. You're talking about digital radio being a radically upgraded audio quality. FM is going to sound like CDs, AM is going to sound like today's FM, so you are going to see a music rebirth on the AM band. You eliminate virtually all of the interference you get driving around town, so forget about the static or the hiss or the pops or the loss of signal, that's all cleared up by the digital processing. In addition to that upgraded audio quality, you also get a host of new wireless data services, and initially that is going to mean seeing the song and the artist and the title or the guest on the talk show appear displayed on your radio screen. But as we move forward in future generations with the technology, we'll have things like store-and-replay or the TiVo-for- radio functionality. That means if you like a song you haven't heard before, press the rewind button and it goes back to the beginning, or if you missed the top of the newscast, you can rewind it to the beginning, or you want to listen to your favorite morning show, but you are not getting up till 10 A.M., just set your electronic program guide the night before and the program will be waiting for you. Other features will include: instant traffic, customized to your route, at the touch of a button; the 'Buy' button for purchases; and a 'more information' button. So, there is a host of really exciting new functionality that's going to be coming to radio as we build out the digital infrastructure.

TWST: If you don't mind, could you tell us about the competitive landscape and how you see iBiquity in that space?

Mr. Struble: Let me answer that question in two different ways, one for the radio broadcasters and then one for iBiquity proper. The radio broadcasters face a host of new digital competitors. If you believe that radio is mobile information and entertainment, there are any number of folks trying to deliver that to consumers. So, some of the most visible and well publicized are Sirius and XM, the two satellite radio providers. They are nationwide, subscription services but providing mobile information and entertainment. Other competitors would include anything like wireless Palms or BlackBerry's, Web-enabled cell phones, and telematics in cars. There are a number of ways that consumers are now being bombarded with mobile information and entertainment, and all of those things have the potential to pull away from radio listenership. So, the need is clear for radio to upgrade. Radio is very good at fighting battles and has been for 90 years. But it will be difficult to fight all of these new competitors with an analog infrastructure. You've got to have digital technology to be able to offer the level of service that the new generation of consumers are demanding. So the radio landscape is actually quite competitive. In terms of our company, for what we are doing ' which is providing the technology to convert radio from analog to digital - there are no competitors by design. The reason for this is because radio is a nationwide service, and there can really only be one standard across the country. It would be inconceivable to have a radio that worked in Boston but when you drove to New York it didn't work because there was a different standard there. So, the regulatory bodies, the government, and the industry encouraged us as a company to come forward with one standard. There was actually a bit of industry consolidation that went into doing that. There were three separate companies that were developing digital radio technology: USA Digital Radio (USADR) was the original broadcaster-backed venture, Lucent Digital Radio (LDR) was a company that spun out of Lucent, and there was a small company in California called Digital Radio Express. Back in 2000, we merged USADR with LDR and then purchased the assets of Digital Radio Express. iBiquity is the company that emerged as the sole source for the technology to convert AM and FM radio to digital.

TWST: What are the primary factors, economic, demographic, political that will impact iBiquity as we move to 2004-2005?

Mr. Struble: The prime factor that we look at is the insatiable demand and acceptance by consumers of digital products. Again, you can look at any number of things: albums going to CDs, digital cameras replacing analog cameras, digital cell phones and all the functionality that they now have, and recently digital television. DVDs are probably the most successful consumer product launch in digital transition in history. Every bit of evidence that we look at says that consumers understand what digital means. They get digital, they buy digital and we believe, and all the research suggests, that the same is going to be the case for digital radio. Consumers just understand it. So that's one huge, huge factor. The second is demographic. I call it the generation or generations of digital kids coming up. You've got a generation now, maybe a generation of half, of kids who don't know what an album is, you know, who have probably never made an analog cell phone call, who have been on the Internet their whole life, and have looked to music sharing services as the source of new information on artists and music, as opposed to the radio as previous generations did when they were kids. And so this generation, which demands all the things that digital brings, has very, very high standards for what they expect out of radio. And the analog infrastructure is simply not going to meet those demands. So that's a demographic trend that is doing nothing but increasing in its importance, and is another one of the driving factors for stations to convert to digital.

TWST: Given that this space has phenomenal potential and what seems to be a rather sizeable industry, what are the barriers to other players coming in and challenging iBiquity at this point?

Mr. Struble: Let me answer your question by first agreeing with you. It is a huge space, and let me just give you some numbers on that. On the station side there are 13,000 AM and FM radio stations across the country. It's roughly a $20 billion industry and that's pretty sizeable itself. But we get a little bit more excited in looking at the radio side. There are 800 million radios in this country now. The average family has six. By many definitions radio is the most ubiquitous consumer product in history. And further, there are 70 million new radios that are sold every year in the U.S. For comparison, take a look at cell phones. Everybody talks about cell phones being a great market, and they are. But the last figures that I saw showed that 20 million cell phones per year are sold in this country. So 20 million cell phones versus 70 million radios. That's why we get excited about the potential of this space. As for barriers to competition, The barriers that we try to put in place for competition, as I mentioned earlier, there is a national barrier, which is just the nature of radio. There are very important historical but also public interest reasons why radio has to have a single broadcast standard across the country. Radio is a means of communication for the government to the citizenry in times of need, and to be able to have one single standard across the country is essential. So, that's a national barrier. And then we've tried to erect other barriers. There is a regulatory barrier. The FCC has approved our technology as the digital radio solution for the United States. That occurred in October of 2002. And then there is an intellectual property portfolio, which backs up the technology. We've got 90 patents which have been issued and another 50 more which are pending. We average about a patent a month in terms of that intellectual property portfolio. And we believe that covers the space and pretty much sets up a very high defensive barrier based on intellectual property for others to try to break.

TWST: Could you tell us what the company's approach to alliances or partnerships will be?

Mr. Struble: It's been a fundamental piece of the strategy from the very beginning. If you think about the challenge of implementing digital radio, you have to, depending on how you are counting, migrate five or six different industries. So the radio broadcasters have to like it and want to put it on the air. They can only do that if the equipment manufacturers, those who make transmission equipment for radio stations, build digital transmission equipment. And you and I can only enjoy HD Radio if companies like Kenwood, JVC, Panasonic, Clarion, Alpine, Harmon Kardon, Yamaha, Visteon, Delphi and others build the radios. Those receiver manufacturers need semiconductors to put into the radios. Then those radios have to be sold through Circuit City or Best Buy or Car Toys or Tweeter and through the auto manufacturers. So, again, there are 5 or 6 different industries that you have to get on the same page, and the alliances and the partnerships and the deals that we have done from the beginning have reflected that challenge. We started with investment. I mentioned that every one of the top 12 radio broadcasters and 15 of the top 25 are investors in our company, and they account collectively for more than 50% of the radio industry revenue. So those who are investors in the company have a real reason not only for their core business, but also for their investment, to push the technology forward. And then we have other investors such as TI (Texas Instruments), which builds digital radio chips; Ford, which builds cars; Visteon, which builds car radios; Harris, the largest transmission equipment manufacturer. We use investment as a means to forward the business strategy. So to recap, we talked about the radio side but if you look at the receiver manufacturers, we've got 18 different licensees. On the chip side, we work with two primary semiconductor manufacturers, Texas Instruments and Phillips, both building chips going into radios. Two other key areas where we have strong relationships are on the component side, those companies who build the guts of radios, as well as with the auto manufacturers. So the alliances, strategies, and partnerships have been a fundamental business strategy from the very beginning.

TWST: If you don't mind, could you tell us about your management team on the technology as well as the business side? Are there any areas that the company is looking to augment?

Mr. Struble: Actually no. We have been around for a few years, so we have a very solid and stable management team. The company originally spun out of CBS/Westinghouse, so many of the folks on the management team have backgrounds there. I was a CBS/Westinghouse employee before being asked back in '96 to take this business and try to push it forward aggressively. The management team includes: Jeff Jury, our COO; Pat Walsh, our CFO; Dave Salemi, our Vice President of Marketing; Al Shuldiner, our General Counsel and Regulatory front person; Gene Parrella, who heads up the Chip Development. They all come from large companies with experience in managing major projects. Pat and I both worked at McKinsey & Company. Jeff came from Westinghouse. Al Shuldiner was the Head Regulatory Counsel at Vinson & Elkins, a large PC law firm, before joining iBiquity. I think that the backgrounds of the management team are necessary given the challenge. We've got to be in the boardrooms of major companies in Detroit, Tokyo and elsewhere. Having that experience and credibility is a critical piece of our management team.

TWST: Could you tell us a little bit about the funding history of iBiquity? Who have been the investors and do you feel any additional rounds may be necessary or you're well funded at this point?

Mr. Struble: We are a private company. We're well funded but it's likely that we would see another private round, before all is said and done. The company has raised around $140 million in four or five different financings. The money has come from several different sources. The first I mentioned was the radio broadcasters, so they were the initial capitalizers of the company, back in the mid 90s. Since then we have branched out to other strategic partners, such as Texas Instruments, Harris, Ford, and Visteon but also to the venture capital community. So we count amongst our large investors companies like JP Morgan, Pequot, New Venture Partners, which is the former Lucent Corporate venture capital arm. Grotech, a Baltimore based VC, is very active in our funding, sits on our board, as well as a bunch of smaller participants: Whitney; Williams, Jones; Waller-Sutton Partners; Granite Ventures, and several others down the line.

TWST: Can you give us a sense of the culture that Bob Struble is developing within the company?

Mr. Struble: It's largely a technical based company still, so we like inventing things and we like pushing the envelope and really coming up with the best solution for the problem that we are attacking. But if I had to characterize it, I would say we are a company that universally views what we are doing as critically important. Radio has been around for 90 years. I mean it's probably going to be around for 900 more and we are the company that's been charged with developing the digital platform to enable radio to be viable, relevant and successful in those coming years. And I think that everyone in our company takes that very, very seriously but also gets excited about it. If we are successful, and within 10 years everyone in the country is buying digital radios, our engineers and business people will be able to say, 'It's my code that went into that radio,' or 'It was my design that made that radio possible,' or 'It was my deal that enabled the sale of that radio.' Our folks get excited about that. So I think it's an environment of excitement, a feeling of importance and mission, and that's helped us quite a bit. We've got a very stable workforce both at the managerial ranks and on down through the lines. People have been at this for some time now and take it quite seriously.

TWST: What could go wrong Bob? What keeps you up at night?

Mr. Struble: Right now, it's about the slope of the curve. The technology has been proven. This is probably the most thoroughly tested system in US broadcasting history. It's been approved by the FCC. It's up and operating and licensed by 300 different radio stations. Receivers are being sold. The question mark is the slope of the curve. We know 10 years from now, all these radios will be digital radios, and radio is not going to remain the only analog medium in a world that's fully digital. We want that curve to be steep and steady, and we are doing everything we can to make that happen.

TWST: What would you expect iBiquity to look like three years from now? And what might be some milestones, you'll pass along the way? Perhaps, is there an IPO in your future?

Mr. Struble: There could be. We sometimes like to think of ourselves as the Qualcomm of radio. The business models are very similar. Qualcomm has developed technology which they license to cell phone manufacturers. So every time a CDMA base station is built or every time a CDMA handset is sold, Qualcomm gets a check. Our model is very similar. Every time a station goes on the air or every time a radio is sold, or a chip is built, we get a check. Our model says that, in the very near future, every one of the 70 million radios sold each year in the U.S. is going to be an HD Radio. So we get excited about the value creation potential. So if you look at us in three or five years, I hope we look a lot like Qualcomm. But I think the company would be an excellent candidate for IPO at the appropriate time. The business dynamics of a licensing model are superior. There's very little capital cost. There's very little operating cost. There's almost no product cost and you are talking about a growing and healthy annuity stream, so the economics behind it are very attractive and certainly would be a candidate for public backing at the right time.

TWST: What would be the sharpest distinction that you can make between iBiquity and the rest of the broadcast industry? What makes you what you are?

Mr. Struble: We are sometimes asked, 'Do you compete with Sirius and XM?' and the answer is no. In fact those guys are actually licensees of some of our technology. So we are not an operator. We don't program stations, and we don't put towers up in the air. We are a technology developer. In a sense, we are selling ammunition to guys who are fighting a war. So the fact that the broadcast industry is so competitive and so vibrant and so quickly moving to digital is great news for us, but we are an enabler and a developer of technology. We are not an operator or even a builder or manufacturer, and we like that position.

TWST: So it is possible for you to keep your finger on technical matters as CEO, correct?

Mr. Struble: It better be. We are, as I mentioned, still a technology development company. The majority of our folks are technical people, and we are still working on a lot of forward-looking technology development, specifically in the area of data applications. So you better believe I keep my finger on the pulse. I was educated as an engineer at MIT, and I have designed plenty of things in my life. So I have a good handle on what is taking place on the development side.

TWST: If you were to sit down today with a group of investors, what two or three reasons would you give them to take a serious look at iBiquity?

Mr. Struble: That's simple. Radio is not going to remain the only analog medium in a world that's fully digital. AM/FM Radio will be digital, too, and we are the sole company that is supplying the technology - backed by the broadcasters and the manufacturers - to do that. That's a pretty exciting position to be in, and, by the way, the market is huge.

TWST: Thank you. (JM)

ROBERT J. STRUBLE President, CEO and Chairman of the Board iBiquity Digital Corporation 8865 Stanford Boulevard, Suite 202 Columbia, MD 21045 (410) 872-1530 (410) 872-1531 Fax: www.ibiquity.com

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