While the news that the iPhone and iPod FM chip might be activated, allowing FM radio integration with these mobile devices, is interesting, I’m not sure it achieves anything at the consumer level. For iPhone users, accessing radio has been something they’ve been doing for a long time. The only difference is that they access it via apps and streams. But, to them, they’re still listening to “radio.” Researcher Mark Ramsey has been particularly eloquent on this point recently.

But I think the most important part of the FM/iPhone rumor is the part that we don’t have information on yet: The actual software. The current model on the iPhone to initiate streaming is via stand-alone apps or limited directories. But this is not the familiar and functional model consumers are used to: They want presets. And not just presets, but presets of all their stations. For example, Radiotime powers the Wonder Radio app, which is a fantastic directory on the iPhone, but it doesn’t include all terrestrial streams.

Thus, what we have is a vacuum between what is delivered—mulitiple apps and limited directories—and what consumers want: The infinite dial (to use the wonderful phrase coined by our friends at Edison Media). Which brings me back to the FM tuner: What if the tuner is just part of a larger play by Apple to create a unified streaming radio experience via an integrated radio app (or radio.app in fanboi parlance)?

The good news is that this would create that infinite dial for the consumer and that infinite dial would include terrestrial radio. The bad news is that terrestrial radio would be in an even more vulnerable position to Internet streams—they’d all be playing on the same playing field and via a single app. Presets could include not just FM stations, but also a nearly limitless number of Internet streams. This would be akin to all of streaming audio suddenly being available on your car radio.

While this is pure guesswork on my part, it is certainly where audio delivery has been heading for some time, and it is the kind of vacuum that Apple would rush to fill. Apple also has the juice to make this happen. Web broadcasters that may have been loathe to sign agreements with other aggregators may see the universal distribution model of the iPod/iPhone as too good to pass up. We certainly have seen this in the music business with iTunes.

In the end, then, what we don’t know about FM on the iPhone and iPod is much more critical than what we do (presumably) know: If Apple does create a unified radio app that includes streaming radio, then radio isn’t in any better shape than they were before—They are competing not just against each other, but the entire spectrum of audio broadcasters. In this world, the infinite dial will have become a reality, and the thing that radio has been fighting for—an FM receiver on iPhones and iPods—may be the very thing that delivers what radio has been fighting against—the mass distribution and acceptance of streaming and Internet-delivered radio.

You can read more from Jim Kerr at: TritonDigitalMedia.com/blog.