Yes it is compressed, but the quality is similar to high quality MP3. Far superior to FM, but not as good as CD, assuming you don't use the RF adapter. If you use the RF adapter it will be slightly better than FM, but similar and the wireless RF just plain sucks ass! I know because I use that in my Freightliner. Very poor quality and irritating as hell trying to find one station to tune into.

So yeah, excellent sound quality from XM, but how you hear it depends on how you have it hooked up. Best way is to get a proper SAT ready head unit and the proper SAT tuner. That's how muy X is set up and it totally kicks ass compared to the Freightliner setup with the wireless RF.