i agree, rebroadcasting a radio station is in the US is illegal. and just by the way, connecting an mp3 player with music that has not been licensed to be used as music on hold is also illegal.
there are a number of services that provide you with a box that you can plumb into your system sirrius/xm and others. you pay a fee for the rights to use it INTERNALLY. however they cannot be used for music on hold. in other words playing through the overhead speakers is allowed using these services, but playing as music on hold is not. a relatively inexpensive solution is to get a music on hold license from BMI who has a multi-million song catalog. this allows you to use any of the songs in their catalog for music on hold. the license fee is annual and is based on the number of current plays (max number of people that would be on hold at any one time). i can, if need be, look up our contract with BMI but i think we pay roughly $250/year. what is nice, is that you can continually change the songs. you do have to buy the songs but most are a buck or so on amazon and as long as your license is valid you can play them as music on hold.