Tesla could provide a great replacement to AM/FM/HD radio and XM by providing a combination of streaming apps and then integrating them to use a single interface to navigate between stations provided by the various apps. Since a single app doesn't have all of the stations, it will require multiple apps - and Tesla can help considerably by allowing stations to be searched across apps.
Another challenge is access to live sports programming - which is usually blocked from streaming. Premium subscriptions to services like TuneIn or XM should provide that access. The current Tesla software doesn't support TuneIn Premium.
From a development standpoint, it's much simpler for Tesla to provide an option for adding the MCU2 radio to the infotainment upgrade.
Though longer term, Tesla could reduce vehicle cost by eliminating the radio for all vehicles and replacing that with an easy-to-use interface to enough streaming apps to provide a full replacement for radio, which will work except in areas with poor or no internet service.