This has been a real pain in the rear end for a while
Here is what I did to fix my issue
Removed mpg123 altogether and installed madplay
Files you need are
libid3tag-0.15.1b
libmad-0.15.1b
madplay-0.15.2b
You can get them from sourceforage
Now you need to edit your musiconhold_custom.conf as follows
[wave]
mode=custom
application=/tmp/music.sh
Then create a file in /tmp/ (or wherever you want to, just update the above lines too if you don't use /tmp) called music.sh
#!/bin/bash
wget -q -T 120 -O -
216.155.137.148:8004 | /usr/local/bin/madplay -Q -o raw:- --mono -R 8000 -a -20 -
Your path to bash may differ, as well as paths to wget and madplay. Use locate or which to find them.
The obvious URL above is the station I've chosen, be sure you change it to the station you have selected.
You can create extension to test
exten => 6000,1,Answer
exten => 6000,2,SetMusicOnHold(default)
exten => 6000,3,MusicOnHold()
exten => 6000,4,HangUp
It took a little time to get this working but now don't have the previous issues