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This sounds regressive and pointless. FM/AM vs. FM radio has to be pennies. In some mountainous areas, only AM radio works.

It should be required by regulation, to be frank. Many places still have emergency broadcasts on AM radio.

especially considering a backup camera and an accompanying display became a requirement in the states, AM radio would be nothing

If we're going to regulation route, we could also require those emergency broadcasts to move to FM.

The cost of issuing new regulations by the government is far lower than the cost to retrofit FM hardware to all stations.

FM frequencies do not propogate in nearly the same way as MW do.