Federal regulators yesterday started looking into whether to approve the use of digital radio service -- a new technology that could bring static-free, compact disc-quality sound to AM and FM broadcasts.

But Federal Communications Commission officials noted yesterday that the FCC will have to answer some tough technical and regulatory questions as it reviews three petitions from communications companies seeking to establish satellite-based digital audio broadcasting services, including one from a firm that wants to serve the District.

The biggest question involves finding more room on a spectrum of broadcast frequencies that is already nearly saturated by radio and television broadcasters and cellular telephone and paging companies that together generate $100 billion in annual revenue.

The FCC will consider where more space can be found and how digital radio would affect those who already use the airwaves.

Satellite-based digital radio companies are potential competitors with traditional radio broadcasters, who want to provide digital radio through land-based systems. The National Association of Broadcasters yesterday warned of "possible dire consequences" to its members.

The House on Monday approved a bill that would help ease the overcrowding of the airwaves by reallocating a portion of the radio spectrum from military to civilian use.

The bill would require the secretary of commerce to recommend within two years the moving of at least 175 megahertz (MHz) of the total federal spectrum from government to civilian uses. Part of that capacity would be held in reserve, to be distributed over a 15-year period.

The Senate has not passed similar legislation.

Bruce Franca, deputy chief engineer of the FCC's Office of Engineering and Technology, said Europe and Canada have already started looking into digital radio. The demand seems obvious, he said, since "compact discs now outsell records and tapes."

The three companies whose petitions the FCC will consider are Satellite CD Radio Inc., Radio Satellite Corp. and Strother Communications Inc.

Radio Satellite wants to build and operate a station that would provide digital radio and other services through a satellite system, and Strother Communications asked permission to construct and operate a digital audio transmission system in Boston and the District. Strother proposed providing 14 digital radio channels on a UHF television channel using European-developed equipment.

In its meeting yesterday, the FCC also sought more comment on proposed changes in its rules covering television satellite stations. It also proposed amending its rules to make amateur radio services more accessible to handicapped persons.