NYTimes provides details on the upcoming AOL Radio application for the iPhone that won an Apple Design Award at this year's WWDC.
According to the article, the new AOL Radio application will connect to AOL's servers over the EDGE, 3G or Wi-Fi and based on your GPS location will tune you to the nearest local CBS radio station. Users will have access to about 200 AOL and 150 CBS stations in 25 different genres. The application and service are free but will be ad-supported, much like traditional radio.
Apple provides a bit more information on the Apple Design Award winner page:
Reliable audio streaming and improved battery life are achieved by using AudioFileServices and AudioQueueServices, while SCNetwork manages the best narrowband or broadband streaming based on whether users are connected via EDGE or Wi-Fi.
According to AOL VP Kevin Conroy, the application's sound quality is "as good as listening to a CD".