Having DAB cake and eating it: temper tantrums in the Global Radio playpen

Most of us mere mortals spend our lives trying to persuade people to give us what we want. We have to persuade our parents to buy us a new toy, persuade a potential employer to offer us a job, persuade the bank manager to give us a business loan. To make these things happen, we are taught to always be careful what we say – “Mind your P’s and Q’s”, our parents told us.

For the wealthy, there is little need for self-control over what comes out of their mouths. Whereas our only power derives from what is in our head, the power of the wealthy derives from what is in their offshore bank accounts. “P’s and Q’s” are barely a necessity when a platinum credit card can be flashed. Money obviates the need for persuasion. So the wealthy can pretty much say what they like, knowing that ‘money talks’ on their behalf, and it certainly seems to talk more loudly than any persuasion that the rest of us can muster.

This week we saw an outburst in The Guardian that would have done any rich, spoilt brat proud. But no, this was the founder and CEO of Global Group, Ashley Tabor, which owns Global Radio, the UK’s largest commercial radio group, demanding that the BBC “put their money where their mouth is” and invest more in DAB radio:

“Tabor said his company, which owns Heart, Classic FM, Capital and LBC, would not invest in new digital services until the DAB signal was sufficiently strong and widespread to match that currently provided by FM. He said the cost of the rollout of DAB and the strengthening of the signal in areas which can already receive it – estimated at between £150m and £200m – was the sole responsibility of the BBC. […]

‘Global has stepped up and said we are absolutely doing it, we have great new ideas of things we could do on digital but we are not going to bloody do it until our listeners can hear it in decent quality and that is something that we have been clear from the start the Beeb will need to do,’ said Tabor, the Global Group founder and chief executive. ‘They have always said yes [and] now is the time to do it. A lot of pressure is building on them to now actually put their money where their mouth is. It’s not actually a lot of money because it’s amortised over 10-12 years. I think it will happen’” [The Guardian removed he word ‘bloody’ from later editions].

Was I the only one baffled by Ashley’s line of argument? Although commercial interests own the lion’s share of DAB in the UK, the largest commercial radio group is insisting here that the cost of fixing DAB to make it work properly is the “sole responsibility” of the publicly funded BBC. Furthermore, Global Radio will only launch new commercial digital radio stations, from which it must expect to make a profit, once the BBC has underwritten the huge cost of making the DAB system fit for purpose using public funds. I remain baffled.

This was by no means the first time, and will probably not be last, that Global Radio has talked rubbish publicly about DAB radio. In its PR, Global paints itself as a driving force behind digital radio and is constantly demanding that DAB switchover be implemented as quickly as possibly. However, in practice, Global has shown no interest in developing DAB as a replacement for FM, having sold off the majority of its DAB licences. This hypocrisy has been documented on previous occasions in this blog, during which time Global’s attitude towards the BBC has shifted from ‘carrot’ to ‘stick’. History speaks volumes.

In October 2007, Global Radio cancelled the contract with Sky inherited from its acquisition of Chrysalis Radio that would have created a national Sky News Radio station on DAB. A Global spokesperson said then that “Global was not prepared to make the necessary investment in this project.”

In December 2007, Global Radio dropped live presenters from the digital radio station The Arrow which it had also acquired from Chrysalis Radio. The Arrow was removed from DAB in London in May 2008, removed from DAB in Scotland in February 2009, removed from satellite and cable TV in June 2009, and removed from DAB in the West Country in February 2010. It is now available over-the-air on only 5 local DAB multiplexes.

In January 2008, Global Radio dropped dedicated shows from the digital version of its Galaxy Radio brand, replacing them with simulcasts of local FM output.

On 31 March 2008, the day after Global Radio’s offer to acquire GCap Media had been accepted, the latter’s two remaining national DAB radio stations Capital Life and TheJazz were closed. GCap had already closed another national DAB station, Core, in January 2008.

In March 2009, Global Radio dropped digital-only station Chill from DAB multiplexes in Leicester, Nottingham and West Wiltshire. Chill was then removed from further local DAB multiplexes in July 2009, and from cable TV in July 2010. It is now available over-the-air on DAB only in London and Birmingham.

However, in April 2009, Ashley said that he appreciated that the BBC had the capacity to make a significant contribution to facilitate Digital Britain from a radio perspective, and that Global Radio was prepared to play a leading role. Confusingly, this was the same month it was announced that Global Radio had agreed terms to sell the majority of its DAB multiplex licenses.

In May 2009, in an interview bizarrely headlined ‘Global evangelist for digital radio: Ashley Tabor has a clear vision for his group…’, he said:

“I am really confident now that all the right things are happening that will get us to where we need to go. We are in favour of [analogue radio] switch-off, so can we do it quickly please?”

That same month, Ashley’s right-hand man at Global Radio, Stephen Miron, told a radio conference:

* “The future of our sector is intrinsically linked to the successful implementation of the government’s digital strategy and to the successful migration to DAB”;
* “We need more of this in the coming weeks and months. Not just words, but action”;
* “We need to get our act together to make the best possible case for consumers to switch to digital”;
* “Global is up for the challenge and, as the largest commercial player, we are prepared to lead this charge.”

In July 2009, Global announced the completion of the sale of its DAB licences, the largest ever transaction of its type, which drastically shifted the dominant ownership of the UK’s commercial radio DAB system from the commercial radio sector itself to transmission specialist Arqiva.

Global Radio sold:
* its 63% shareholding in Digital One, the sole national DAB multiplex for commercial radio;
* its 100% shareholding in Now Digital Ltd and Now Digital (Southern) Ltd, its local DAB multiplexes;
* 12% of MXR Holdings Ltd.

These transactions left Global Radio with a 51% shareholding in MXR, owner of five regional DAB multiplexes, a half-stake in 3 CE Digital local multiplexes and a minority stake in Digital Radio Group, owner of one London multiplex. At a stroke, Global’s role in DAB had been reduced from the dominant player to an also-ran. However, this did not prevent Ashley from stating in the press release announcing these disposals:

“As a company we are leading the commercial radio industry in its drive to digital.”

Neither this press release, nor the Annual Accounts, revealed how much Global Radio commanded for its sale of these assets. All we know is that the last, shortlived chief executive at GCap Media, Fru Hazlitt, was so disenamoured of DAB that she had planned to sell the company’s controlling stake in the DAB national multiplex licence for £1 in January 2008 (the transaction was halted by Global’s offer for GCap).

None of these closures and disposals seemed to change Global Radio’s public enthusiasm for DAB radio. In July 2010, a government press release on digital radio included a quote from Ashley saying:

“We look forward to working with the government and other partners to bring the benefits of digital radio to a growing group of listeners.”

So what precipitated the change of heart in Ashley’s previously collaborative noises to the BBC from a ‘carrot’ into the ‘stick’ evident in his interview this week? Well, less than 24 hours earlier, the government had published a report on DAB radio switchover that was critical of many radio sector stakeholders for the lack of progress that had been made during the last decade. Those criticised included commercial radio, its trade body RadioCentre, the Digital Radio Development Bureau and its successor, Digital Radio UK. Some people can take measured criticisms like this in their stride. But others cannot.

Not only does Global Radio account for 38% of UK commercial radio listening, but the group funds a substantial portion of RadioCentre (£2.8m in subscriptions between September 2007 and March 2009) and of the Digital Radio Development Bureau and Digital Radio UK. Even so, why did this new government report exercise Ashley so much? Because:
* Global Radio needs DAB switchover to succeed for the company to hang on to its valuable analogue radio licences;
* The responsibility for making DAB switchover happen now lies elsewhere, so Ashley has decided to pin the tail on the BBC.

Maybe Ashley is a graduate of the Malcolm McLaren and Stevo school of negotiation. This is the strategy where you make the most outrageous demands and the other person caves in for fear of not being invited to your party. This might work in the unregulated music business, where excess is viewed as a virtue, but in the radio industry there are laws and rules governing large parts of the business.

What would be the response of record companies if a radio owner were to march in and tell them that they should pay radio stations for playing their music, rather than the other way around? Or if you were to tell record companies that your radio stations would no longer play ‘hit’ records that line their coffers but, instead, would deliberately play unpopular songs that they did not want on the radio. Record company bosses would probably laugh in your face and ask their legal department to show you a filing cabinet full of royalty agreements with commercial radio dating back to 1973.

Getting your own way, all the time, only works when you have been given absolute power over your fag. Ashley phoning a journalist, stomping his feet at the BBC and demanding that it do this or that will have no effect whatsoever. His demands about DAB must have had BBC radio managers laughing their socks off on Wednesday morning. As Scott Taunton, the straight-talking managing director of UTV Radio, said of Ashley in 2009:

“He is a guy who is used to getting his own way. He isn’t from the same school of business, the same school of negotiation, that I am.”

So why exactly does Global Radio need DAB switchover to happen? Because:
* Global Radio was created by Ashley’s millionaire father for a son who is a radio obsessive (“I would literally have a radio in my [school] bag and the second I was allowed to put it on I would actually phone [presenter] Pat Sharp in the studio at whatever time, 10.30, 11.30, just to say hello and develop a relationship with him. He thought I was nuts,” said Ashley);
* Global Radio overpaid to acquire GCap Media in June 2008 for £375m, a mis-managed company whose performance was dropping like a stone, and whose market capitalisation had fallen from £711m in 2005 to £200m by year-end 2007;
* Global Radio has already had to write down its assets by £194m in March 2009, reducing the group’s net book value to £351m from the total £545m it had paid for Chrysalis and GCap in 2007 and 2008 respectively;
* Global Radio “is primarily funded by debt”, its accounts state, and external bank debt was £110m in October 2009, an amount that must be repaid in quarterly instalments by October 2012;
* Global Radio has been hit hard in 2010 by the new government’s sudden 50% cut to its advertising spend (“The COI change has been larger than expected, very abrupt. It’s been pretty severe, more than 50%,” said Ashley)
* Ofcom is presently re-evaluating the price of Global Radio’s Classic FM licence, the most profitable in commercial radio and, if DAB switchover is abolished, the cost of that licence could be increased from its current £50,000 per annum to nearer £1m per annum from 2011 to 2018;
* The Digital Economy Act 2010 renewed commercial radio licences for a further seven years only on the basis that DAB switchover will happen. If switchover does not happen, the government has the power to terminate all renewed licences by 2015 (or by two years’ notice, if later). However, in its accounts, Global decided to write off the ‘goodwill’ of its GCap acquisitions over twenty years.

For Global Radio, which owns more analogue licences than any other commercial radio group, this means that the value of its business could be reduced drastically if DAB switchover does not happen. Its one national licence would become a lot more expensive and then might have to be publicly auctioned, while its dozens of local licences could be terminated earlier than anticipated. Global needs DAB switchover to happen at all costs.

However, at every opportunity, Global decided to forgo investment in the DAB platform and, instead, to dispose of the majority of its DAB assets. This has left it with almost no remaining leverage to ensure that DAB switchover will ever happen. Furthermore, Ashley has alienated commercial radio competitors such as UTV, precipitating its resignation from the trade body RadioCentre in 2009. UTV’s Scott Taunton described Ashley as a “rich man’s son” and explained:

“For us it came down to Global, as the largest funder of the RadioCentre, making sure that the policies of the RadioCentre were in the interests of Global Radio. At times, for me, that meant the [trade body] was pursuing an agenda that wasn’t necessarily in the interests of all its members.”

So, Global Radio needs DAB switchover to happen in order to maintain the value of its analogue radio business. But it can do little itself directly, its biggest competitor Bauer is unlikely to help, and its smaller competitors have been alienated. Global had succeeded in wrangling a very beneficial deal from Lord Carter in the Digital Economy Act, but Carter exited quickly and the whole government has changed since then. The sting in the tail was that parliament included a get-out clause (if DAB switchover does not happen …) and now that clause looks more likely than ever to be invoked.

The pheasants look as if they might be coming home to roost at the Tabor estate. And what does a young man do when the train set his father made for him is not working the way he wants? He stomps his feet. He shouts. He issues demands. This week, the BBC has been on the receiving end. It should feel honoured. Ashley has demonstrated his belief that the BBC can do more to fix the DAB disaster than the whole of the commercial radio sector and its trade and marketing agencies added together. But, remind me, why should part of my BBC Licence Fee go to fix his plaything?

And what might Ashley think of doing next if the BBC does not bow to exactly what he wants? Will he be demanding that BBC director general Mark Thompson stands on his head in the corridor during short break, or runs around the perimeter of White City in his underwear fifty times in the pouring rain, or sits in the BBC library after work copying out chapters of ‘Paradise Lost’ by hand?

Are any of these shenanigans a strategy for the future of radio? All they demonstrate to the world is that large parts of the UK commercial radio sector seem to have completely lost the plot.

[declaration of interest: I was paid to advise DMGT on the offer made for GCap Media by Global Radio in 2008]

The exit strategy for DAB radio switchover: the Consumer Expert Group addresses Vaizey’s “big if”

When you are looking for an exit route from a product you have been developing for nearly two decades, and which has consumed hundreds of millions of pounds, you need to find a damn good reason that will deflect the blame elsewhere. You need a report, an organisation or some bona fide research that screams out ‘no’ at the highest volume. Then your response can be: “I would be a fool to ignore the warning signs voiced by X” when what you are really saying is: “Blame them, not me! It’s them that made me do it.”

DAB radio and digital radio switchover presently seem to be at this point. But there is a big problem for a radio industry that is belatedly trying to find a way ‘out’. Almost all previous reports produced by the government, the regulator, the radio industry, the electronics industry, the working groups, Digital Britain and the car manufacturers have been overwhelmingly positive about DAB and have painted an amazingly rosy future. There has been almost nothing published about DAB by agencies of the state that has said plainly: “Stop this crazy plan.”

So whose fault can it be that DAB radio and digital switchover has not worked? Given the sheer number of agencies that have been so gung-ho for so long about DAB, the fickle finger of fate naturally had to point elsewhere and so it landed upon ‘the consumer’. It becomes much easier to decide that the general public is the reason for a masterplan’s lack of success when everybody sat around the government’s conference table is feeling a little guilty about their shared role in a wasted £1bn investment.

A change of regime is always a useful point at which to invoke such a change. In July 2009, less than a year into his first radio job, the BBC’s top radio manager Tim Davie explained that digital radio switchover would be determined by listeners, not by the BBC:

“From a BBC perspective, whether it be ‘Feedback’ or our constant audience research, the idea that we would move to formally engaging switchover without talking to listeners, getting listener satisfaction numbers, all the various things we do, would be not our plan in any way. We would be – we are – in dialogue now for the next six years. … I think we are pretty committed to digital. Having said that, since I have arrived at the BBC, I certainly haven’t seen it as inevitable that we move to DAB.”

The following month, BBC Trust chairman Sir Michael Lyons reinforced this notion:

“Who comes first in this? Audiences and the people who pay the Licence Fee. It is an extraordinarily ambitious suggestion, as colleagues have referred to, that by 2015 we will all be ready for this. So you can’t move faster than the British public want you to move on any issue.”

The change of government then provided an opportunity for the Department for Culture, Media & Sport [DCMS] to similarly invoke the will of the people in determining digital radio switchover. In July 2010, culture minister Ed Vaizey said:

“If, and it is a big if, the consumer is ready, we will support a 2015 switchover date. But, as I have already said, it is the consumer, through their listening habits and purchasing decisions, who will ultimately determine the case for switchover.” [emphasis added]

For both the BBC and the government, the problem with belatedly putting the consumer at the centre of digital radio switchover is that almost no organisation, over the course of a decade of DAB, has done any significant consumer research about DAB. Why? Because the implementation of DAB radio in the UK had always been a top-down policy initiative by civil servants, regulators, trade organisations and commercial opportunists, without ‘the man on the Clapham omnibus’ having ever been consulted.

There was one notable exception. When the government’s Digital Radio Working Group considered the issue of DAB radio switchover during 2007/8, a sub-committee named the Consumer Impact Group had prepared a report. However, this report was not made public until almost a year after the Working Group had been wound up. The report had been highly critical that consumers’ viewpoints were not being considered:

“The group is concerned that the case for digital [radio] migration has not been made clearly enough from the point of view of the consumer. While it is clear what the rationale is for the radio industry, the group would like to see a compelling argument as to why digital migration is desirable for consumers and what its benefits would be for consumers.”

But that was then, this is now. Then, digital radio was considered by the previous government to be a real possibility, and that is why dissent from consumer groups was buried. Now, that same consumer dissent could provide the perfect nail on which to hang any number of DAB exit strategies. A new report outlining the massive consumer challenge of digital radio switchover would be a perfect ‘get out of jail free’ card for many long-term DAB stakeholders.

So today, a new report has been published by the government’s Consumer Expert Group [CEG] which asks the pertinent question ‘Digital radio switchover: what is in it for consumers?’ Moreover, rather than it being embarrassedly added to the depths of the DCMS web site a year later, today’s report was circulated to the press and stakeholders in advance of publication. Its introduction states:

“This report was not requested by Government but the CEG have taken the initiative to attain a thorough understanding of the consumer issues surrounding digital radio and bring them to the Government’s attention as preliminary policy decisions are made.”

In other words, this new report just happens to directly address the “big if” cited in the culture minister’s speech about digital radio switchover nine weeks earlier. If its publication were not startling enough, its conclusions are damning in almost every respect about the lack of progress made to date with digital radio switchover. But, before that, the report is quick to invoke the role of consumers in what it admits is “new” government policy:

“Setting a date, or a firm commitment to a date, would have had the effect of scaring consumers to switch. Clearly this would not be compatible with Government policy to support a switchover when enough listeners voluntarily adopt digital radio. Government’s new emphasis on consumers should provide the focus to ensure consumer concerns and needs regarding digital radio are addressed, thereby reducing the barriers to voluntary take-up.”

However, if these “consumer concerns and needs” were to prove simply too onerous and costly for the government to address in the current economic climate, the choice is now there to opt out of pursuing the DAB switchover policy altogether. The Film Council … the Audit Commission … DAB radio switchover. Chop chop chop. The first two might have seemed a bit arbitrary to voters. Now, at least this one has a consumer report to back it up.

So this new report reiterates and elaborates the same arguments made in the previous consumer report to the Digital Radio Working Group two years earlier, and adds some more. Its recommendations are worth quoting in full:

“The consumer costs and consumer benefits of digital radio:
* A full cost benefit analysis from a user perspective must be carried out as a matter of urgency;
* Consumer benefits need to be clear and demonstrable before an announcement for a digital switchover is made;
* A workable system for the disposing and recycling analogue radios, which consumers are likely to implement must be introduced;
* Emphasis should not be placed on driving down costs unless the sound quality and functionality of cheaper DAB sets are at least equal to analogue;
* There must be more emphasis on improving the basic usability, rather than the advanced functionality, of digital radio to encourage take-up;
* Both the BBC and the commercial sector need to offer new and compelling digital content to convince consumers to adopt digital radio;
* Research into consumers’ willingness to pay and into their concerns and needs relating to digital radio needs to be carried out as a matter of urgency.

Take-up:
* The take-up criterion should compare like-for-like listening platforms and measure DAB listening only;
* A digital switchover date should only be announced when no more than 30 per cent of listening remains on analogue;
* The target date for a digital switchover should be revised upwards as 2015 is realistically far too early for the necessary preparations to be put in place for consumers. Any target date set should be looked upon as secondary to consumer issues such as willingness to adopt the technology, voluntary take-up and digital radio reception as an instigator for switchover;
* Measures need to be taken to introduce a more inclusive methodology for measuring take-up.

Coverage:
* The fair allocation of coverage build-out costs between the BBC and the commercial sector must be made once build-out plans are agreed;
* The coverage criterion should be measured by signal strength, not just population, so that indoor and mobile reception are considered;
* The coverage criterion must be geographically weighted to ensure rural communities are not left behind;
* The switchover roadmap must include plans for DAB+;
* DAB+ compatible chips must be installed as standard to “future-proof” receivers as a matter of urgency;
* The reception time delay between receivers should be standardised.

Vehicles:
* A Digital Radio Switchover date cannot be announced until DAB radios have been standard in vehicles for a minimum of 2 years, in other words by 2015 at the earliest;
* An affordable in-vehicle converter needs to be developed urgently which works with a vehicle’s external aerial, is safe, easy to fit and aesthetically pleasing;
* A switchover date cannot be announced until there is a solution to in-vehicle conversions, providing the majority of motorists with the opportunity to have a digital radio in their vehicle;
* A solution for the continuation of traffic and travel services on FM for a transitional period following digital switchover needs to be agreed;
* An accreditation scheme for dealers and other installers of retrofit digital devices must be developed.

Accessibility:
* Digital switchover should not go ahead without suitable equipment being available for all listeners including older and disabled people;
* Digital radios which incorporate voice output technology must be available for blind and partially-sighted people preferably via the mainstream market or, if that is not feasible, through a channel made affordable by Government intervention, such as a help scheme;
* Appropriate information and support on the enhanced features of accessible digital radios should be available from retailers;
• Appropriate usability requirements should be included in minimum receiver specifications and a kitemarking scheme;
* The proposed integrated station guide must be consumer tested before any decision on its inclusion in devices is made.

Consumer information:
* A clear and balanced public information campaign needs to be implemented through a trusted body, independent of the industry;
* Once a switchover date is announced, sales of analogue-only radio must stop;
* A post-announcement information campaign to target vulnerable groups should be developed;
* The digital tick should be adopted for digital radio and adapted as necessary;
* A ‘scorecard’ should be displayed on all products to convey more information about the available features at the point of sale;
* A digital radio pre-purchase checklist should be widely available and at point of sale;
* An effective training and “accredited adviser” scheme needs to be developed for retailers;
* The CEG must be involved in the minimum specification for digital radio;
* The CEG must be involved in the design and development of any public information campaigns.

Consumer support and a help scheme:
* Any Digital Radio Switchover must be accompanied by a help scheme to assist those who would find it disproportionately difficult to switch;
* The eligibility criteria of a help scheme should include people registered blind or partially sighted, those on low incomes, the over 65s and those with learning disabilities and other cognitive difficulties such as Alzheimer patients;
* A help scheme for digital radio should provide appropriate accessible equipment and include as many instructional home visits as necessary;
* A help scheme should be publicised early on in the information process on a national level and the publicity should coincide with the start of the national information campaign for a switchover;
* The CEG must be consulted in the preparation of printed material and publicity on the help and support available;
* The engagement of the voluntary sector in providing assistance with a digital radio switchover should be properly supported and funded;
* Government should ensure that charities, such as Wireless for the Blind Fund and W4B, are not undermined financially or strategically by a help scheme or any of its components, as these charities will be left with providing the ongoing of support, assistance and help people need once a help scheme has finished.” [End of quote.]

These recommendations seem to divide into: those that would require considerable time to implement, those that would require considerable money to implement, those that would require both time and money, and those that would be almost impossible to implement. Such recommendations should have been considered and acted upon before DAB transmitters even started to be built-out in the 1990s. Their presence in 2010 only serves to highlight the ineptitude of the 1990s ‘plan’.

No organisation escapes unscathed from the critique of the Consumer Expert Group (some are not named): BBC radio, commercial radio, Ofcom, RadioCentre, receiver manufacturers, the Digital Radio Development Bureau, Digital Radio UK, etc. By spreading the criticism so widely, no single stakeholder gets to feel singled out or isolated for DAB’s failure.

Now it is left to the government to decide to pull down the shutters on DAB radio switchover. That will not require the immediate death of DAB. But it will provide the BBC with something that it can sacrifice down the line to budget cuts in the assault on its Licence Fee. For commercial radio, it will provide relief from expensive dual transmission costs, once a settlement has allowed it to keep its coveted licence renewals invoked by this year’s Digital Economy Act. For consumers, it will offer certainty that FM radios will continue to work. There will be sighs of relief all around.

I started writing about DAB radio as a news editor in 1992 and today’s report is the first government distributed document I have seen that sensibly articulates the multitude of barriers and obstacles to digital radio switchover happening in the UK. The very first words of the report summarise the current situation perfectly:

“Despite the introduction of digital radio in the UK in 1998, analogue radio is still a key feature in many households.”

Now we await the fat lady.

Without local commercial radio, switchover to DAB will not happen

I am often asked why I believe that digital radio switchover will never happen in the UK. My answer is always this – the available statistics and data on consumer take-up of DAB radio fail to demonstrate that it will grow sufficiently to become the mass medium for radio broadcasting. I can see nothing in more than a decade of figures to offer an inkling that DAB radio will ever become anything more than a minority interest, compared to FM/AM.

Audience data published by Ofcom in its latest Communications Market report (page 219, Figure 3.34) help us to understand the current roadblock with DAB consumer take-up. Ofcom divulged the proportion of listening to individual stations by platform, data that has not been made public by RAJAR (see graph below).

The information demonstrates that a few stations, notably AM broadcasters BBC Five Live and Absolute Radio, are making significant headway with attracting audiences on digital platforms. However, in order to put these data in a market perspective, it is necessary to understand the relative importance of each of these stations.

The above graph helps put the planned transition from analogue to digital in a proper market perspective. For example, Absolute Radio has made much of the fact that more than 50% of its listening is already attributed to digital platforms. However, in the context of digital radio switchover, its audience is so small that it has little overall impact. The volume of listening to some local London stations is greater than to national Absolute Radio.

The government has stated that it will not consider ‘switchover’ until at least 50% of radio listening is via digital platforms. Digital listening to the ten stations and station types shown in the above graph add up to only 20%, even after ten years of DAB (digital-only stations bring the total to 24%). There is a reason that it will prove an impossible challenge to get this up to the 50% government target.

Around 300 local commercial radio stations account for 31% of all radio listening. Their success in convincing audiences to migrate to digital platforms will be a vitally important part of the aim to achieve the 50% criterion. However, only 15% of local commercial radio listening is attributed to digital platforms, the lowest proportion (along with BBC local radio) of the ten stations/types in the graph. The task to improve this performance from 15% to the 24% national average is likely to prove impossible, let alone to grow it to the 50% criterion.

This is because many stations in the local commercial radio sector cannot and will not ever be available on DAB because:
* The economics of DAB transmission make it too costly;
* The unavailability of any local DAB multiplex in some areas;
* The unavailability of space for stations on some local DAB multiplexes;
* The industry grand plan to amalgamate existing local multiplexes into regional multiplexes makes DAB transmission, for small local radio stations, more irrelevant and more costly.

These issues had been identified by the government in its Digital Britain consultation in June 2009:
* “merging [DAB] multiplexes will reduce the overall capacity available for DAB services, therefore reducing the potential for new services”;
* “reduced capacity on local multiplexes might result in some services losing their current carriage on DAB.”

The government’s decision to ignore these outcomes is now coming back to bite it on the bum. Not having a plan to ensure that all local commercial radio stations can be made available on DAB will only ensure that the government’s 50% criterion can never be met.

At the same time, the determination of the largest players in the commercial radio sector to forge ahead with DAB, regardless of these unresolved issues, has created a serious schism between them and the smaller local radio groups and independent local stations who have no digital future. These issues were raised in parliamentary debate of the Digital Economy Act but were ignored and trivialised by the DAB lobbyists.

Some local commercial radio owners are seriously alienated by the way their predicaments have been ignored by large radio groups and their trade organisations – RadioCentre, Digital Radio Development Bureau and Digital Radio UK. One such group owner, UKRD, has taken direct action by running a campaign on-air and on its stations’ websites against the government’s proposed switchover to DAB.

A page entitled ‘Love FM’ on the Wessex FM website says:

“As you probably know Wessex FM proudly broadcasts to this area on the FM frequencies 96 & 97.2, and had been hoping to for many years to come. However, recent developments mean that we may not be able to broadcast in this way for much longer. In fact, the current plan from parliament is to switch off the use of FM for many stations in 2015. That means, soon, you may not be able to listen to us on FM.”

William Rogers, UKRD Group chief executive officer explained:

“We are not prepared to encourage any of our listeners to go and replace their perfectly satisfactory analogue radio set with a DAB one which may not be able to pick up a DAB signal at all and if it can, it may be a signal which may be wholly inadequate. Even worse, the very station that the listener may have heard the [DAB marketing] advertisement on may not be on DAB or even have a DAB future.”

Pam Lawton, managing director of another UKRD-owned station, KL.FM in King’s Lynn, said:

“We are not on DAB at the moment and currently most of the DAB digital platforms have been snapped up. As things stand, West Norfolk does not have a digital platform because there are limitations about how many there can be and there will only be one station that will serve Norfolk. That station will probably be based in Norwich so once the government decides to turn off FM, we will have to switch off for good.”

The paradox is that the radio sector stakeholders who have been pushed aside and ignored by the DAB movers and shakers are some of the very ones who hold the key to enabling digital radio switchover to happen. Unless the huge audience for local commercial radio can be persuaded to migrate its listening to DAB, the 50% criterion cannot be achieved.

At the same time, some stakeholders who are making the most noise about DAB switchover matter the least in the scheme of things. Absolute Radio can trumpet its individual success with digital listening, but it is contributing less than 1% to the 50% criterion that has to be reached, despite being a national station. It is the hundreds of local commercial radio stations that, collectively, matter the most. Yet, many of these have been denied any seat at the DAB table.

As politicians have learnt through the ages, unless you can convince the little guys (the local radio station owners) and the ‘man in the street’ (the radio listener) to endorse your grand scheme, a scheme is all it will remain. Fancy words in boardrooms, lengthy documents from corporate consultants and detailed project management timelines will inevitably come to nothing, without involving and bringing on board the people who really matter.

It is the radio industry data, particularly for local radio, that tell the real story of DAB and why it can never become the mass radio medium for UK consumers. That is why digital radio switchover will not happen.

[Note: all RAJAR data are Q1 2010, as used by Ofcom]

Lies, damned lies and … Ofcom’s first digital radio progress report

Ofcom quietly published its first Digital Radio Progress Report in July 2010, without fanfare or a press release. This report has been a remarkably long time coming, given that DAB radio has been with us more than a decade. During that time, Ofcom has published 26 Digital Television Progress Reports, starting in 2003.

Here was an opportunity for Ofcom to demonstrate that it is acting in the public interest by publishing solid, objective data about the progress of digital radio in the UK. Did it take that opportunity? No. Instead, Ofcom published a set of data that are so selective and so distorted that they misrepresent the progress (or lack of it) made to date in advancing the UK towards the ‘digital radio switchover’ that our government is determined to execute. Why? Because Ofcom (like the government’s DCMS department) seems determined to persuade us that its totally unrealistic plan for DAB radio has not been an unmitigated disaster with the citizen/consumers on whose behalf it is supposed to be working.

It might appear pedantic to pick over the details of data represented in this feeble 24-page Ofcom report. However, it must be stressed that this is no nitpicking exercise. The Digital Economy Act 2010 insists that this very document submitted by Ofcom (and another by the BBC) to the government will decide whether the UK will progress to ‘digital radio switchover’. It is these data that will decide whether we can continue to receive BBC network radio stations on the 100 million analogue radios that are out there. It is these data that could mean we have to replace perfectly satisfactory analogue radio receivers in every household across the country, at a cost of millions to consumers.

To note the issues in the order they appear in the Ofcom report:

FIGURE 1:
This Ofcom graph purports to show that:
* Digital platforms’ share of radio listening increased from 12.8% to 24.0% between 2007 and 2010 (this is TRUE);
* Analogue platforms’ share of listening decreased from 87.2% to 76.0% between 2007 and 2010 (this is FALSE).

The four figures cited in Figure 1 for the analogue platform – 87.2% in 2007, 82.2% in 2008, 79.9% in 2009 and 76.0% in 2010 – are an Ofcom invention. These false data seek to demonstrate that a rapid decline in analogue listening has taken place. This is not true. As the graph below shows, analogue listening has remained remarkably static over this timeframe.

The situation is complicated by two facts: a significant proportion of radio listening remains ‘unspecified’ by respondents in RAJAR listening surveys, and that this proportion has varied greatly in size in different surveys. However, this does not detract from the falsehood of Ofcom’s attempt to demonstrate that analogue listening is in sharp decline.

FIGURE 2:
This Ofcom graph purports to show that:
* 54% of 15-24 year olds use digital radio;
* 57% of 25-34 year olds use digital radio;
* 56% of 55-64 year olds use digital radio;
* 46% of 65-74 year olds use digital radio;
* 29% of 75+ year olds use digital radio.

In fact, the fine print explains that Ofcom had asked the question ‘Have you ever used digital radio?’ This ensured that the results were almost meaningless because they tell us nothing whatsoever about current usage of digital radio. For example, a 68-year old who, on a single occasion ten years ago, had listened to digital radio for 10 minutes will have answered ‘yes’, despite having made no further usage during the last decade.

Ofcom’s objective here seems to have been to highlight the large size of the resulting numbers, without indicating that they derive from an almost useless question (garbage in, garbage out). If you were to ask people ‘Have you ever bought a banana?’, almost 100% would respond ‘yes’. Their answers tell you absolutely nothing about the current market for bananas. Exactly the same is true of digital radio usage. In this context, the resulting numbers seem remarkably low because only half the population has ever tried digital radio (even once in their lifetime).

FIGURE 3:
This Ofcom graph purports to show that:
* 53% of adults use digital radio;
* 63% of adults in socio-economic groups AB use digital radio;
* 55% of adults in socio-economic group C1 use digital radio;
* 48% of adults in socio-economic group C2 use digital radio;
* 42% of adults in socio-economic groups DE use digital radio.

Just as in Figure 2, the fine print explains that Ofcom had asked the question ‘Have you ever used digital radio? The same issues apply here as with Figure 2.

FIGURE 5:
This Ofcom graph shows digital platforms’ share of total radio listening, but the data omit:
* A comparison with the analogue platform;
* A time sequence to show how fast the market is changing.

The following graph demonstrates the slow growth of digital platforms and their low level in comparison with analogue. It also demonstrates that a proportion of the growth in digital platform usage is the result of a statistical technicality caused by a reduction of ‘unspecified’ listening in recent quarters.

The following graph demonstrates the slow growth of individual digital platforms since 2007, using the same scale as applied in the preceding graph.

FIGURE 8:
This Ofcom graph purports to show that:
* “five digital-only services generated a weekly reach of 1 million+ listeners in Q1 2010.”

However, the fine print explains that the Ofcom data refer to “all listeners [aged] 4+”, whereas the radio industry’s standard metric is and always has been ‘adults 15+’. Indeed, all RAJAR audience data used in this same Ofcom report refer to ‘adults 15+’, except for Figure 8.

Once the graph is re-worked using ’15+’ instead of ‘4+’ data (see above), it is evident that:
* Only three digital-only radio stations generate a weekly reach of 1million+ adult listeners;
* BBC World Service was included in the Ofcom graph (and was one of the five stations cited as exceeding 1m weekly reach) even though it is not digital-only, being available across a large part of the UK on 648AM;
* BBC Asian Network was omitted from the Ofcom graph (also available on analogue but limited to the Midlands);
* Not only are Panjab Radio and NME Radio no longer available on the national DAB platform (as the Ofcom text notes), but Q Radio is no longer on DAB, and the BBC has proposed the closure of Asian Network;
* These weekly reach data for digital-only stations should be considered in the context of analogue radio stations – for example, BBC Radio 2 has a weekly adult reach of 14.6million.

FIGURE 9:
This Ofcom graph purports to show that:
* Digital radio’s current share of listening is “broadly in line with the organic growth outlined on the [government’s] forecast chart.”

Bizarrely, the Ofcom graph displays the government forecasts but has omitted the historical data that would show how successfully the forecast has been achieved to date.

The forecast published in June 2009 predicted that, by year-end 2009 (a mere six months later), digital platforms would account for 24% or 26%, the latter the result of a concerted ‘drive to digital.’ In fact, the year-end figure was 21%. The likely reason that Ofcom has failed to include the historical data is that neither of the two forecasts (‘organic growth’ or the ‘drive to digital’) has any chance of being realised. If the current growth rate is extrapolated, the 50% criterion will be reached by year-end 2018, and certainly not by either 2013 or 2015, as the forecast (credited to Value Partners) predicted.

FIGURE 14:
This Ofcom graph and accompanying text assert that:
* “DAB sets made up over a fifth (21%) of all radio sales by volume” in the year to Q1 2010;
* “In the portable market, DAB sets accounted for 65% of sales.”

However, Ofcom omitted to point out that:
* Fewer DAB radios had been sold in 2009 than in 2008;
* DAB radios were a lower proportion of total radios sold in 2009 than in 2008;
* Its reference to “the portable market” is limited strictly to ‘portable radios’ of the type used in kitchens. There is not a single mobile phone on sale in the UK that includes DAB radio, and the vast majority of portable media players that include radio do not have DAB radio.

In fact, the data in the graph above demonstrate that:
* DAB radio receiver sales volumes peaked in 2007/8 at 2.2million per annum and have declined 13% since then to 1.9million per annum;
* Analogue radios contributed a greater proportion of total radio receiver sales in 2009 (79%) than they had in 2008 (78%);
* DAB has not invigorated the market for radios, with fewer radios sold now than ever, perhaps due to evident consumer confusion about ‘digital radio switchover’.

FIGURE 17:
The Ofcom graph shows that:
* 17% of adults say they are likely to buy a DAB radio in the next 12 months.

However, the Ofcom graph does not offer a historical perspective. The graph above demonstrates that the propensity to purchase a DAB radio has diminished over time. In 2006, 17% of respondents said they would be likely to buy a DAB radio within the next six months. In 2010, 17% said they would be likely to buy a DAB radio within the next 12 months. This would translate into a significant reduction in DAB radio receiver sales. Additionally, the proportion of respondents who say they do not know if they will purchase a DAB radio continues to increase over time, perhaps a further symptom of market confusion or DAB indifference.
————
Given that Ofcom has had the luxury of several years to prepare this first Digital Radio Progress Report, the result is a travesty. It should not be the regulator’s role to selectively highlight and distort data that support its own policies in a document specifically requested by government in order to inform a parliamentary decision on digital radio switchover. We deserve better from our public servants. Otherwise, they might as well go and work for Digital Radio UK, the lobby group (funded by commercial interests and the BBC) busy pumping out propaganda to try and persuade consumers that they need DAB radio.

On page 5 of this first Digital Radio Progress Report, Ofcom notes:

“Our principal general duty, when carrying out our radio functions, is … to further the interests of citizens in relation to communications matters.”

Exactly how are citizens’ interests being furthered by Ofcom distorting the facts about digital radio take-up?

Cost/benefit analysis of DAB radio: Murdoch rushes in where governments fear to tread

Governments have had plenty of practice, over many years, of hiding reports from the electorate. In some cases, they might justify this as a matter of national security or military expedience. However, it is hard to understand how the UK government thought it could justify hiding from the public a cost/benefit analysis of digital radio switchover it had commissioned and then, a year later, have believed the matter had been successfully buried. But so it was, until the House of Lords Communications Committee intervened in early 2010.

On 6 February 2009, PricewaterhouseCoopers [PWC] delivered a 91-page report entitled ‘Cost Benefit Analysis of Digital Radio Migration’ to Ofcom. It contained a number of serious reservations that any benefits would arise from switchover to DAB radio, even by the year 2030:

“The results suggest that there are relatively few up-sides to the estimates, and several significant downside risks. … The results suggest that there is a very long pay-back from the Digital Radio Working Group [DRWG] policy ‘investment’ – the Net Present Value [NPV] turns positive after 2026. This result assumes that the existing multiplex licences are extended to 2030, as per the DRWG recommendations. Without the licence extension or any other policy instruments that provide clarity on the long term future of commercial radio, the industry and consumers may fail to see the benefits of digital radio over the longer term. Our analysis suggests that the NPV is negative should either of these two proposals not be implemented.” [emphasis added]

Since then, parliamentary policy has failed to provide “clarity on the long term future of commercial radio,” as evidenced by last week’s wholly ambivalent government statement about digital radio switchover. As a result, just as PWC predicted, industry and consumers increasingly “fail to see the benefits of digital radio over the longer term.”

The PWC report, and its verdict that digital radio switchover offers almost no benefits, remained hidden from public view from February until November 2009, when an appendix to the government’s Digital Economy Bill mentioned it casually. That citation raised questions: what was this PWC report, and why could not the public see it?

When the House of Lords Select Committee on Communications convened in January 2010 to consider the digital switchover issue, it asked those same questions of the Ofcom officers it invited to present evidence:

Baroness McIntosh of Hudnall: We understand that you commissioned a report from PWC last year into the costs and benefits of digital switchover in radio, but you didn’t publish it. We know, therefore, what we have learned from the Department for Culture, Media & Sport about what it said. It appears that it found, for example, that the benefits could – and I emphasise the word “could” – outweigh the costs by £437 million after 2026, but that conclusion is hedged about with quite a lot of caveats to do with what would have to happen in order for that good outcome to eventuate, and that if those things didn’t happen, then quite quickly you would get into a position where the costs would outweigh the benefits. Can you tell us a bit about that report? In particular, can you tell us why you haven’t published it? Do you think that, given what it appears to say – I choose my words carefully – about the constraints on potential for benefit, that it should have been available to inform the Government’s digital policy? ….. [edited]

Mr Peter Davies [Director of Radio Policy & Broadcast Licensing, Ofcom]: We were asked to commission it by the Government. We then commissioned it from PWC with a lot of input from various government departments and then submitted it to the Secretary of State.

Chairman: So you decided not to publish it.

Mr Stewart Purvis [Partner for Content & Standards, Ofcom]: …. [edited] On this particular occasion, it was decided in conjunction with the Department that work would be sent to the Department. Perhaps the most important thing is for Peter to respond to your characterisation of the work, but, in a sense, we have not hidden the piece of work. Indeed, I think it is now available to you. Is that right?

Baroness McIntosh of Hudnall: In, as they say, a redacted form.

Chairman: Just to be absolutely clear, the Department asked you to commission the work from PWC. Is that what you are saying?

Mr Purvis: They asked us to commission the work. Did they ask us specifically from PWC?

Mr Davies: Not specifically from PWC.

Chairman: The Department said to Ofcom, “Ofcom, you go and commission this particular work.” Is that the position?

Mr Davies: Yes.

Chairman: You then got the work which then came back to you and then you sent it to the Government and the Government said, “We’re not going to publish this in full.”

Mr Davies: I think they have certainly made it available to various groups. I think consumer groups have had it for some time.

Chairman: Fine. There will be no problem, therefore, in this Committee having the full report. …. [edited]

Baroness McIntosh of Hudnall: The thing that is slightly troubling – perhaps only to me, but a bit – is that when you see what appears to be evidence that the costs and benefits are, let’s say, finely balanced, or could be, that the drive towards digital migration, one might think, was driven more by the technology than by the needs either of the broadcasters or the consumers.

The Committee’s displeasure with Ofcom and the government was evident both in this exchange and in its subsequent report on digital switchover, published in March 2010, which stated:

“We strongly regret that the cost benefit analysis carried out by PricewaterhouseCoopers was not published at the time it was delivered to Ofcom and the Department for Culture, Media & Sport in February 2009.”

The government’s response to the Committee’s statement, published in June 2010, was:

“The Cost Benefit Analysis produced by PricewaterhouseCoopers, to accompany the work of the Digital Radio Working Group, was widely distributed amongst broadcasters and consumer representatives. However, there were technical difficulties which prevented the initial publication of the report on the DCMS website; these were rectified and the report published in February 2010.”

“Technical difficulties” for a whole year? As excuses go, this really takes the biscuit. It seems unlikely that the PWC report would ever have been made public, if not for the intervention of the House of Lords Communications Committee in January 2010 (first publication of the report’s findings was in this blog a few days later).

The PWC report did not offer the government the support for its digital radio switchover strategy that it had anticipated, so now it has to commission a further cost/benefit analysis which it hopes will produce a more favourable outcome. Is the government in a hurry to complete another study evaluating the supposed benefits of digital radio switchover? Hardly, judging by the evidence.

In June 2009, the government’s Digital Britain report had promised:

“We will conduct a full Impact Assessment, including a Cost/Benefit Analysis of Digital Radio Upgrade.”

In January 2010, Ofcom’s Peter Davies had offered evidence to the House of Lords Communications Committee:

Baroness McIntosh of Hudnall: What about your own impact assessment?

Mr Davies: We haven’t done an impact assessment yet.

Baroness McIntosh of Hudnall: But you have been asked to – correct?

Mr Davies: At some point in the future. I think the Digital Britain report said that we would be asked to do one, but we haven’t been asked to do one yet. Obviously we would need to do that and we would need a much fuller cost-benefit analysis before any final decision was taken.

Most recently, in June 2010, the government stated:

“We agree that a full impact assessment is an essential part of informing the Government’s decision on whether and when to move from a primarily analogue to a digital radio landscape. Work has already begun to collect the evidence needed to support an impact assessment and analysis should begin shortly.” [emphasis added]

Why bother with yet another report at this late hour in DAB’s history? Someone else has already done the sums. News International has just run its sliderule over the idea of launching a national digital radio station ‘SunTalk’ (a brand extension of its national daily newspaper ‘The Sun’) on the DAB platform. Its result was: DAB radio is not a viable commercial platform.

According to The Guardian: “News International management were considering extending the [SunTalk] station’s reach by launching it nationally on DAB digital radio. But it is understood they baulked at the extra cost.”

If Murdoch cannot see a way to make a profit from a broadcast platform that is crying out for compelling content, then how exactly does any other content owner think it can make a financial return from DAB radio?

It’s the platforms Rupert Murdoch rejects ….

Ofcom’s DAB radio strategy: busy doing nothing, trying to find lots of things not to do

In June 2010, the government published its flimsy 5-page response to the House of Lords Communications Committee’s critical 279-page report on digital switchover that had been unveiled three months earlier. The response was a disappointing document that dismissed with little more than one sentence each of the Committee’s carefully worded recommendations, deduced after having considered hours and volumes of evidence.

One of the Communications Committee’s most forceful recommendations, in Paragraph 107, had concerned the necessary improvements to DAB reception:

“Given the importance for the Government’s plans for digital switchover of universal reception of the BBC’s national stations, it is essential that a firm and unambiguous plan and funding for the completion of build-out of the BBC’s national multiplex is put in place as soon as possible.”

The government’s feeble response to this issue was:

“In order to agree a plan for DAB coverage build-out, so that it can ultimately meet the current levels of FM coverage, Ofcom have been asked to form a Coverage and Spectrum Planning Group to make recommendation on the following:
* the current coverage of national and local radio on FM;
* changes to the current multiplex structure and frequency allocation; and
* what new infrastructure is needed so that DAB can match FM.
Ofcom are expected to present their recommendation to Government in Spring 2011.”

Surely it does not need yet another government committee to look into DAB? Had not these issues already been considered by the Digital Radio Working Group two years ago? By Digital Britain a year ago? By Ofcom? By anybody during the last decade of DAB underachievement?

Then I recalled a speech made by Ofcom Director of Radio, Peter Davies, to the Radio Festival in July 2008, in which he had set out his imminent workplan on the DAB issue:

“Increased coverage of DAB will be absolutely essential if it is ever to become a full replacement for FM for most services…… That brings us to the tricky part – defining what existing coverage is and how we improve it. This is still work in progress but we are approaching it in three stages. Firstly, we need to define what existing FM coverage is. That’s not nearly as simple as it might sound. Radio is not like television where you stick an aerial on the roof and you get reception or you don’t. Radio is used in every room in the house, usually with a portable aerial. It’s used outdoors on a wide variety of devices and it’s listened to in cars. So we need to look at geographic coverage as well as population coverage, and we need to look at indoor coverage in different parts of the house. FM coverage gradually fades as you move around, so we need to decide how strong the signal needs to be to be usable. And, surprisingly, this work has never really been done in any kind of consistent manner for the UK as a whole, so it has taken a little while to agree a framework and calculate the numbers.

Having done that, we then have to do the same for existing DAB coverage. Now DAB has all the same issues as FM, but it also has different characteristics. It doesn’t fade in the same way – you either get it or you don’t – so we need a different set of definitions here. Once we have defined what existing DAB coverage is, we then have to work out what it would take to get existing DAB coverage up to the level of existing FM coverage. Now, we have already done a lot of work on this, and certainly enough to inform the interim report, and the whole thing will be finalised in time for the [government’s] Digital Radio Working Group final report later this year.”

This 2008 workplan seems to comprise precisely the same tasks that the government has just told Ofcom to start and complete by Spring 2011. So what happened? Was this work not done by late 2008, as Davies had promised? And if not, why not?

Improvements to DAB reception were considered a critical issue for consumer take-up of DAB radio … in 2008. Now, in 2010, they are probably the main factor likely to sound the death knell of DAB as a mass market consumer platform. So are we to assume that, in the intervening two years, work on this essential issue was never done, or was not completed, by Ofcom?

Why should consumers consider DAB radio to be anything other than a disaster if even our public servants appear to be busy doing little to fix the acute problems with DAB reception that the public has been rightly complaining about for years?

Digital radio switchover: talk is cheap, action will never happen

Politics is the art of flip-flop policymaking (and justifying it convincingly). This is evident in the new UK government’s first statement about DAB radio and digital radio switchover, published this week. What is its new policy? Well, there is no new policy. The Conservatives are simply continuing the previous Labour government’s ill-advised determination to foist digital radio switchover on an increasingly resistant public. A critic might even be so bold as to say of new Secretary of State for Culture, Media & Sport, Jeremy Hunt:

“The Government have ducked sorting out digital radio switchover…. They are giving Ministers the power to switch over in 2015, yes, but without taking any of the difficult measures necessary to make it practical or possible.”

But wait! In fact, these were the words of Jeremy Hunt himself, in April 2010, criticising his predecessor, Ben Bradshaw, during the previous Labour government. Now that the boot is on the Right foot, Hunt seems to have simply dusted off the Labour policy he had previously lambasted, crossed out Bradshaw’s name and written in his own instead.

In his same speech to the House of Commons, Hunt had been scathing about the digital radio switchover clause in the Digital Economy Bill:

“I think that clause is so weak that it is virtually meaningless, as it gives the Secretary of State the power to mandate switchover in 2015 but the Government have not taken the difficult steps that would have made that possible, such as ensuring that the car industry installs digital radios as standard [….] and that there is proper reception on all roads and highways. As a result, a lot of people are very concerned that 110 million analogue radios will have to be junked in 2015.”

That was ‘opposition’ Hunt then. Three months later, ‘government’ Hunt appears to see nothing problematic with the digital radio switchover clause. Indeed, the new government has committed itself to exactly the same fantastical strategy for DAB radio as the old government:

* digital radio listening will somehow reach 50% of the total by 2012;
* someone somewhere will pay to upgrade the DAB transmission system to render it as robust as FM;
* someone somewhere will launch lots of fab new digital radio stations;
* consumers will somehow be persuaded to replace all six or more of their household’s radios with new DAB ones;
* analogue radio transmitters will somehow be switched off in 2015;
* all cars will somehow be fitted with DAB radios by 2015;
* mobile phones and portable devices will somehow all suddenly include DAB, rather than FM, radio receivers.

All these objectives always had been, and still are, pure fantasy. None, and I literally mean ‘none’, of the available evidence and data demonstrate that these things will happen. Definitely not by 2012, certainly not by 2015, and probably never.

A year ago, Hunt was very clear in marking out his party’s strategy for digital radio as more realistic than the ruling Labour government’s:

“I think the most important thing is not something the government can do, but something the industry can do is, which is to develop new services on digital platforms that actually mean there is a real consumer benefit to DAB. At the moment, the benefits are marginal. I mean, there are some benefits in terms of quality, but your batteries get used up a lot more quickly, the reception is a lot more flaky, and a lot of the things that make digital switchover attractive on TV don’t apply to radio in the same way. So I think the industry needs to do a lot more to make it in consumers’ interests to have that switchover…..

We have also got to think about consumer anger. Consumers are people that the radio sector needs. It’s going through a very tough patch. We don’t want to switch off listeners by suddenly saying that we are not going to – that we are going to force you to have a new radio, and there’s a real danger, if we do that, that they might start listening to their iPods and their CD players instead. … At the moment, we seem to be getting into this mindset where we want to force it on the public, even though the public can’t really see what the benefits are.”

So, between then and now, who is it that has convinced Hunt to backtrack and instead to endorse the status quo? The civil servants in his Department who hitched their wagon to the ‘DAB is the future’ train too long ago to let go now? The Ofcom radio staff who were appointed years ago on the strength of their promise to deliver digital radio switchover? The commercial lobbyists who still fantasise about the huge profits to be made (for Britain!) from global exports of their European DAB technology? All of them are nothing more than dreamers.

At the same time, many of these same parties are already distancing themselves from responsibility for DAB so as to save their own skins once DAB’s ‘fall from grace’ inevitably arrives:

* the government is saying that digital radio switchover depends upon the public’s take-up;
* the regulator is saying that digital radio switchover depends upon the radio industry’s commitment;
* the commercial radio industry is saying that digital radio switchover depends upon the BBC paying;
* the BBC is saying that digital radio switchover depends upon its audiences;
* the BBC Trust is saying that digital radio switchover depends upon the commercial radio sector’s commitment.

For years now, the stakeholders assembled around the table in those endless DAB committee meetings have been occupied identifying DAB’s problems yet, at the same time, every one of them has expected somebody somewhere else to fix them. But there is no sugar daddy out there. There is no cavalry about to ride over the horizon. It is you stakeholders who created such a mess of DAB and either you must fix it ….. or throw in the towel.

This week’s announcement about digital radio switchover demonstrated that the new government does not have the guts to do what many, including the House of Lords Communications Committee chaired by Lord Fowler, had asked of them. To commission an objective analysis of why DAB was introduced in the first place, how close we really are to digital switchover, whether we will ever get there, what the costs have been to the radio sector to date, and to evaluate whether it is still worth pursuing these objectives thirty years after the DAB technology was invented.

Instead, the government has decreed that the present DAB unreality will continue … probably until one of these stakeholders eventually is forced by circumstance to kick the entire digital radio switchover issue into the long grass. In the meantime, the poor consumer is still on the end of misleading campaigns to persuade them that they will need to buy new DAB radios (which are mostly British), throw out their old radios (which are mostly foreign) and somehow get used to the sub-standard quality of DAB radio reception that most of us experience. No wonder they are asking in increasing numbers: ‘What was wrong with FM?’ And the correct answer is: ‘Nothing at all’.

This week’s government statement by Ed Vaizey, the new Culture Minister, was so woolly and vague that the media were able to write it up from wholly contradictory viewpoints.

“Government abandons 2015 target date for switching radio to digital signal,” said the Bloomberg News headline.

“Radio industry welcomes Tory backing for digital switchover in 2015”, said The Guardian headline.

Those two headlines cannot both be true. All the government has done this week is leave everyone more confused than ever. So why did it bother saying anything at all? A critic of Ed Vaizey’s announcement might be moved to say:

“We have got to be concerned that people will be ready before any switchover takes place and that there won’t be literally millions of analogue radios which suddenly become redundant. As you know, the government has set a provisional target date of 2015 and we are sceptical about whether that target can actually be met.”

But wait! In fact, those were the words of Ed Vaizey himself, in March 2010, criticising the then Labour government’s digital switchover plans.

Meet the new boss, same as the old boss.

Selling the UK DAB radio ‘success’ story overseas

In amongst all the jubilant public statements from media stakeholders following Assent of the Digital Economy Act 2010 this month, one press release stood out for taking wild optimism to new heights. It said:

“The Digital Economy Bill is linked to the government’s Digital Britain report which defines a digital radio switchover plan lasting two years. The migration start date for this is triggered when DAB coverage reaches the same as today’s FM and when 50% of all radio listening is via a digital platform. Based on current digital listening projections from Rajar, and the roll out of new DAB transmitters from Arqiva and the BBC, the UK market is set to achieve both of these milestone [sic] in 2013 …”

Will 50% of radio listening in the UK be delivered via digital platforms by 2013? Not a chance. Even our politicians have admitted this will not happen. Look at the graph below.

The government’s Digital Britain report, published in mid-2009, had forecast that digital listening would be 26% by year-end 2009, which proved to be wide of the mark. The actual figure was 20.9%. What is the chance of 50% being reached by 2013? Zero.

So why is this press release so determined to tell us that “the UK market is set to achieve” a milestone that is so obviously impossible? The answer lies in this next graph which shows that DAB radio receiver sales in the UK were lower in 2009 than in 2008, and lower in 2008 than in 2007.

The market for DAB radio receivers in the UK has been slowing since the end of 2007. DAB radio unit sales are now less than 2m per annum, a volume last seen in 2006. For financial stakeholders in the UK DAB radio receiver sector, this is very bad news.

Frontier Silicon is one of those main stakeholders, a private UK-based semiconductor company that supplies 70% of the global DAB receiver market. With the UK market for DAB drying up, and the European market never having really developed at all, companies such as Frontier Silicon are having to look further overseas for DAB sales. Trade shows such as last week’s Hong Kong Electronics Fair become significant events to convince new territories of the advantages of DAB radio.

So the Frontier Silicon press release quoted earlier, though datelined “London”, is not intended for domestic consumption at all. Yes, it might seem laughable in the UK to believe that digital listening will reach 50% by 2013. But, for Frontier Silicon, this ‘success’ story will help convince overseas markets that DAB is already a raging success in the company’s homeland. This is ‘sales patter’, not fact.

Who at the Hong Kong event would want to learn that the commercial radio industry in the UK has been brought financially to its knees by its decision more than a decade ago to pursue the DAB dream?

Digital Economy Act 2010: a smokescreen for backroom radio ‘deal’

On 8 April 2010 at 1732, the Digital Economy Act was given Royal Assent by Parliament. Who exactly will benefit from the radio clauses in the Act? Certainly not the consumer.

“The passing of the Digital Economy Bill into law is great news for receiver manufacturers,” said Frontier Silicon CEO Anthony Sethill. As explained by Electronics Weekly: “Much of the world DAB industry revolves around decoder chips and modules from UK companies, in particular Frontier Silicon. These firms can expect a bonanza as consumers replace FM radios with DAB receivers.” Frontier Silicon says it supplies semi-conductors and modules for 70% of the global DAB receiver market.

Sadly, the Bill/Act was not really about digital radio at all. For the radio sector lobbyists, it was all about securing an automatic licence extension for Global Radio’s Classic FM, the most profitable station in commercial radio, so as to avoid its valuable FM slot being auctioned to allcomers. The payback on this valuable asset alone easily justified spending £100,000s on parliamentary smooching. It was interesting to see one Labour MP acknowledge the true purpose for all this parliamentary lobbying in the House of Commons debate when he congratulated “[Classic FM managing director] Darren Henley for making a cause of the issue.”

The clauses in the Digital Economy Bill on the planned expansion of DAB radio and digital radio switchover were simply promises that Lord Carter had insisted upon as the radio industry’s quid pro quo for government assistance to Global Radio’s most profitable asset. The existence of this ‘deal’ between Lord Carter and Global Radio was confirmed by Digital Radio Working Group chairman Barry Cox in his evidence to the House of Lords:

“Lord Carter did not like to do [the deal] immediately. As I understand, he wanted to get something more back from the radio industry. I think there is a deal in place on renewing these licences, yes.”

However, the quid pro quo promise to develop DAB radio will never come to fruition. Now that Global Radio has got what it wanted, over the coming months, the radio industry’s commitment to continue with DAB will inevitably be rolled back. Every excuse under the sun will be wheeled out – the economy, the expense, the lack of industry profitability (having spent nearly £1billion on DAB to date), consumer resistance, the regulator, the Licence Fee, the government (old and new), the car industry, the French, the mobile phone manufacturers, whatever …….

The reasons that digital radio migration/switchover will never happen are no different now than they were before the Digital Economy Bill was passed into law. For the consumer, who seems increasingly unconvinced about the merits of DAB radio, this legislation changes nothing at all. Those reasons, as itemised in my written submission to the House of Lords in January 2010, are:

* The characteristics of radio make the logistics of switchover a very different proposition to the television medium;
* The robustness of the existing analogue FM radio broadcasting system;
* Shortcomings of the digital broadcast system, ‘Digital Audio Broadcasting’ [DAB], that is intended to replace analogue radio broadcasting in the UK.

More specifically:

1. Existing FM radio coverage is robust with close to universal coverage:
* 50 years’ development and investment has resulted in FM providing robust radio coverage to 98.5% of the UK population.

2. No alternative usage is proposed for FM or AM radio spectrum:
* Ofcom has proposed no alternate purpose for vacated spectrum;
* There is no proposed spectrum auction to benefit the Treasury.

3. FM/AM radio already provides substantial consumer choice:
* Unlike analogue television, consumers are already offered a wide choice of content on analogue radio;
* 14 analogue radio stations are available to the average UK consumer (29 stations in London), according to Ofcom research.

4. FM is a cheaper transmission system for small, local radio stations:
* FM is a cheaper, more efficient broadcast technology for small, local radio stations than DAB;
* A single FM transmitter can serve a coverage area of 10 to 30 miles radius.

5. Consumers are very satisfied with their existing choice of radio:
* 91% of UK consumers are satisfied with the choice of radio stations in their area, according to Ofcom research;
* 69% of UK consumers only listen to one or two different radio stations in an average week, according to Ofcom research.

6. Sales of radio receivers are in overall decline in the UK:
* Consumer sales of traditional radio receivers are in long-term decline in the UK, according to GfK research;
* Consumers are increasingly purchasing integrated media devices (mp3 players, mobile phones, SatNav) that include radio reception.

7. ‘FM’ is the global standard for radio in mobile devices:
* FM radio is the standard broadcast receiver in the global mobile phone market;
* Not one mobile phone is on sale in the UK that incorporates DAB radio.

8. The large volume of analogue radio receivers in UK households will not be quickly replaced:
* Most households have one analogue television to replace, whereas the average household has more than 5 analogue radios;
* The natural replacement cycle for a radio receiver is more than ten years.

9. Lack of consumer awareness of DAB radio:
* Ofcom said the results of its market research “highlights the continued lack of awareness among consumers of ways of accessing digital radio”.

10. Low consumer interest in purchasing DAB radio receivers:
* Only 16% of consumers intend to purchase a DAB radio in the next 12 months, according to Ofcom research;
* 78% of radio receivers purchased by consumers in the UK (8 million units per annum) are analogue (FM/AM) and do not include DAB, according to GfK data.

11. Sales volumes of DAB radio receivers are in decline:
* UK sales volumes of DAB radios have declined year-on-year in three consecutive quarters in 2008/9, according to GfK data.

12. DAB radio offers poorer quality reception than FM radio:
* The DAB transmission network was optimised to be received in-car, rather than in-buildings;
* Consumer DAB reception remains poor in urban areas, in offices, in houses and in basements, compared to FM.

13. No common geographical coverage delivered by DAB multiplexes:
* Consumers may receive only some DAB radio stations, because geographical coverage varies by multiplex owner.

14. Increased content choice for consumers is largely illusory:
* The majority of content available on DAB radio duplicates stations already available on analogue radio.

15. Digital radio content is not proving attractive to consumers:
* Only 5% of commercial radio listening is to digital-only radio stations, according to RAJAR research;
* 74% of commercial radio listening on digital platforms is to existing analogue radio stations, according to RAJAR research.

16. Consumer choice of exclusive digital radio content is shrinking:
* The majority of national commercial digital radio stations have closed due to lack of listening and low revenues;
* After ten years of DAB in the UK, no digital radio station yet generates an operating profit.

17. Minimal DAB radio listening out-of-home:
* Most DAB radio listening is in-home, and DAB is not impacting the 37% of radio listening out-of-home;
* Less than 1% of cars have DAB radios fitted, according to DRWG data.

18. DAB radio has limited appeal to young people:
* Only 18% of DAB radio receiver owners are under the age of 35, according to DRDB data;
* DAB take-up in the youth market is essential to foster usage and loyalty.

19. DAB multiplex roll-out timetable has been delayed:
* New DAB local multiplexes licensed by Ofcom between 2007 and 2009 have yet to launch;
* DAB launch delays undermine consumer confidence.

20. Legacy DAB receivers cannot be upgraded:
* Almost none of the 10 million DAB radio receivers sold in the UK can be upgraded to the newer DAB+ transmission standard;
* Neither can UK receivers be used to receive the digital radio systems implemented in other European countries (notably France).

21. DAB/FM combination radio receivers have become the norm:
* 95% of DAB radio receivers on sale in the UK also incorporate FM radio;
* 9 million FM radios are added annually to the UK consumer stock (plus millions of FM radios in mobile devices), compared to 2 million DAB radios, according to GfK data.

22. DAB carriage costs are too high:
* Carriage costs of the DAB platform remain too costly for content owners to offer new, commercially viable radio services, compared to FM;
* Unused capacity exists on DAB multiplexes, narrowing consumer choice.

23. DAB investment is proving too costly for the radio industry:
* The UK radio industry is estimated to have spent more than £700m on DAB transmission costs and content in the last ten years;
* The UK commercial radio sector is no longer profitable, partly as a result of having diverted its operating profits to DAB.

24. DAB is not a globally implemented standard:
* DAB is not the digital radio transmission standard used in the most commercially significant global markets (notably the United States).

These factors make it unlikely that a complete switchover to DAB digital terrestrial transmission will happen for radio in the UK.

With television, there existed consumer dissatisfaction with the limited choice of content available from the four or five available analogue terrestrial channels. This was evidenced by consumer willingness to pay subscriptions for exclusive content delivered by satellite. Consumer choice has been extended greatly by the Freeview digital terrestrial channels, many of which are available free, and the required hardware is low-cost.

Ofcom research demonstrates that there is little dissatisfaction with the choice of radio content available from analogue terrestrial channels, and there is no evidence of consumer willingness to pay for exclusive radio content. Consequently, the radio industry has proven unable to offer content on DAB of sufficient appeal to persuade consumers to purchase relatively high-cost DAB hardware in anywhere near as substantial numbers as they have purchased Freeview digital television boxes.

Additionally, it has taken far too long to bring DAB radio to the consumer market, and its window of opportunity for mass take-up has probably passed. Technological development of DAB was started in 1981, but the system was not demonstrated publicly in the UK until 1993 and not implemented for the consumer market until 1999. In the meantime, the internet has expanded to offer UK consumers a much wider choice of radio content than is available from DAB.

In this sense, DAB radio can be viewed as an ‘interim’ technology (similar to the VHS videocassette) offering consumers a bridge between a low-tech past and a relatively high-tech future. If DAB radio had been rolled out in the early 1990s, it might have gained sufficient momentum by now to replace FM radio in the UK. However, in the consumer’s eyes, the appeal of DAB now represents a very marginal ‘upgrade’ to FM radio. Whereas, the wealth of radio content that is now available online is proving far more exciting.

The strategic mistake of the UK radio industry in deciding to invest heavily in DAB radio was its inherent belief in the mantra ‘build it and they will come.’ Because the radio industry has habitually offered content delivered to the consumer ‘free’ at the point of consumption, it failed to understand that, to motivate consumers sufficiently to purchase relatively expensive DAB radio hardware would necessitate a high-profile, integrated marketing campaign. Worse, the commercial radio sector believed that compelling digital content could be added ‘later’ to DAB radio, once sufficient listeners had bought the hardware, rather than content being the cornerstone of the sector’s digital offerings from the outset.

In my opinion, the likely outcome is that FM radio (supplemented in the UK by AM and Long Wave) will continue to be the dominant radio broadcast technology. For those consumers who seek more specialised content or time-shifted programmes, the internet will offer them what they require, delivered to a growing range of listening opportunities integrated into all sorts of communication devices. In this way, the future will continue to be FM radio for everyday consumer purposes, with personal consumer choice extended significantly by the internet.

Digital radio switchover: legislation is “virtually meaningless,” says Shadow Culture Secretary

House of Commons
6 April 2010 @ 1627
Digital Economy Bill, Second Reading [excerpts]

The Secretary of State for Culture, Media and Sport (Mr. Ben Bradshaw): The switchover to digital radio has probably aroused more interest than any other issue in the Bill except that of unlawful file sharing. The target date of 2015, set by the Government, is an incentive not an ultimatum. We have made it clear that a decision on digital switchover will not be made until national DAB coverage is comparable to that of FM, until local DAB reaches 90 per cent of the population and all major roads and until 50 per cent of listening is through digital means. Once all those criteria have been satisfied, there will be at least two years before switchover takes place, at which point we expect coverage and listening to reach nearly universal levels — that is, about 98.5 per cent judged by television reach.

[…]

Mr. Jeremy Hunt (South-West Surrey) (Conservative): The Government have ducked sorting out digital radio switchover, which the Secretary of State has just talked about. They are giving Ministers the power to switch over in 2015, yes, but without taking any of the difficult measures necessary to make it practical or possible.

[…]

Robert Key (Salisbury) (Conservative): Is my hon. Friend content with clause 31, on the digital switchover? It is estimated that the costs to the consumer will be £800 million, and there is no sign of manufacturers of DAB radios producing cheap radios, no estimate of the cost of throwing away millions of existing FM sets, no sign that the motor car industry is going to come up with the goods — [interruption]. A Labour Back Bencher says, “Yes there is,” but I have read all the papers and although there are one or two pious hopes, there is nothing more than that. This will be extremely expensive, and the 2015 deadline is unattainable. Is my hon. Friend content, therefore, or will we make some further promises?

Mr. Hunt: I share my hon. Friend’s concerns, because I think that clause is so weak that it is virtually meaningless, as it gives the Secretary of State the power to mandate switchover in 2015 but the Government have not taken the difficult steps that would have made that possible, such as ensuring that the car industry installs digital radios as standard, as my hon. Friend suggests, and that there is proper reception on all roads and highways. As a result, a lot of people are very concerned that 110 million analogue radios will have to be junked in 2015. In particular, I would have liked the Government to find out whether we could move from DAB to the DAB+ technology, which most people think will be far more effective. If they had done that, this measure would not threaten smaller local radio stations.

Mr. Siôn Simon (Birmingham, Erdington) (Labour) rose —

Mr. Hunt: I will give way to the former Minister with responsibility for creative industries, and then I will make some progress.

Mr. Simon: Given the hon. Gentleman’s desire to move to DAB+, what does he suggest the 8 million people in this country who have bought very expensive DAB radios should do?

Mr.Hunt: First, let me say that when the hon. Gentleman stepped down as Minister for the creative industries, it was a great shame that he was not replaced. It would have helped in the sensible framing of the Bill if we had had a Minister with that responsibility now, but there is none. The answer to the hon. Gentleman’s question is simply this: when we migrate from one technology to another — whether analogue to DAB, or DAB to DAB+ — we need some kind of help scheme, as we have with TV digital switchover, but there is no mention of a help scheme in this Bill. That serves to highlight why the Government have ducked the important decisions.

[…]

Mr. Don Foster (Bath) (Liberal Democrat): Notwithstanding the many concerns that have been raised over the past few months about the move from analogue to digital radio, broadly speaking there is now consensus about that measure. The Secretary of State has laid down clear criteria that have to be met on listenership and coverage before the two-year starting pistol can be fired. Of course, there have been concerns. For example, some people thought that FM would be dropped, but we know that it will not be dropped; indeed, FM could become a new vibrant platform for local and micro-local radio stations and given more power. Possibly, Ofcom could start to give them even longer licences. With all the conditions that have been inserted, that is another exciting provision that we should acknowledge and accept so that everyone can have the real benefits of the digital radio era, in terms of greater interactivity and so on. The Government have done a disservice by failing to promote the real benefits of digital radio as effectively as they could. It is not surprising that the Committee in their lordships’ House castigated the Government for their failure. The industry could have done more. It is a pity that it has taken so long for FM to be included in all the DAB radios now on sale. It is only very recently that we have heard of the launch of the mechanism that will ensure people can have a single tuner covering DAB and FM — a single EPG, or electronic programme guide. That is welcome, but the work could have been done sooner.

[…]

Mr. John Whittingdale (Maldon and East Chelmsford) (Conservative): I now turn to DAB radio. Commercial radio and the BBC have invested huge amounts in moving to DAB, and commercial radio in particular is now in real economic difficulties, as the report that my Select Committee — the Culture, Media and Sport Committee — issued this morning explains. There is no doubt that one burden on it is having to broadcast in analogue and digital simultaneously, and it would provide some help if it had a firm pathway to a future in which it need only broadcast in DAB. I believe that the 2015 date, which I know is not in the Bill, is unrealistic. It is sensible to set a date, but most people believe that that is probably too ambitious, because of the single problem of car radios. Yes, some manufacturers are beginning to fit DAB radios in cars, but there is a huge reservoir of cars that will not have them for a very long time. We must get to a point at which an in-car radio can easily be converted to DAB. The device that is on the market at the moment, which I have in my car, has so many wires, antennae and bits of equipment that I do not believe it will be taken up with great enthusiasm.

[…]

Mr. Austin Mitchell (Great Grimsby) (Labour): I cannot agree with my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) in his analysis of the digital radio switchover. Clearly the industry, in the main, supports digital switchover, but of course a switchover to DAB radio by 2015 is wholly impractical and out of the question because that is too soon. It will be much more difficult to switch over to digital radio than it was to switch over to digital TV, because that process was helped by the mass subscription to Sky and by the development of Freeserve. Such provision does not exist in respect of radio, because there are 120 million radios in this country and sales of digital radio have not taken off. Digital radio is quite expensive and if we make it compulsory, that will be a heavy tax on the consumer. One of the lower prices for a digital radio is about £85, and that price has increased with devaluation. So this would be a heavy burden to impose on the consumer, and if we require switchover, it would leave about 120 stations still on FM and locked out in the cold. We do not have to switch over at this speed and we do not have to switch over to DAB because we could move to DAB+, which would allow both services to be run concurrently. I am worried about the digital switchover for radio, because the crucial factor here is car radios, for which the technology is never sold effectively. Like the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), my experience with DAB in the car has been totally unsatisfactory. Not only is it messy, but it is difficult to pick up a station, and the signal cuts in and out and fades away, so one is constantly having to switch back to FM. Digital car radio sales are crucial, but such sales have been low and there is no sign of their taking off. Only 1 per cent of cars are fitted with a digital radio, and until there is a mass fitting of digital car radios we shall not be able to have an effective switch-off. I am worried about that provision.

[…]

Mr. John Grogan (Selby) (Labour): Two great debates on this Bill, with commercial interests on both sides, have been referred to tonight. I will not rehearse all the arguments, but one of the debates is on digital radio. The Opposition Front-Bench team seems to be saying that it opposes the current model the Government are suggesting. The Opposition spokesman suggested that he was now in favour of DAB+. It is interesting that hundreds of radio stations listened to by our constituents throughout the land, such as Minster FM, are being offered no digital future whatever in this Bill. What they are being offered, at best, is a place on a joint FM and digital electronic programme guide that is still being developed, and even if they get on that device, they will still not have all the advantages of potential and so forth, and they will be very much second-class stations. Under the Bill as currently drafted, that is the future. Helpful amendments were tabled by the Conservatives and the Liberal Democrats in the House of Lords suggesting that before any switchover there should be full consideration of all local and community stations. I will re-table those amendments today; I hope that the hon. Member for Bath will support them, and that they might tempt the Conservative Front Bench, too, in the negotiations for the wash-up. There is another side to the debate, to do with the BBC and some other digital radio interests. This reinforces the point that we should still have a full Committee stage — and if we cannot have that, we should pass the Bill on to our successors.

[debate ended 10pm]

The Digital Economy Bill: let the horse-trading begin, says Shadow Minister

Ed Vaizey MP for Wantage & Didcot
Conservative Party Shadow Minister for Culture
23 March 2010 @ Imperial War Museum North

In today’s radio industry, brands have been shaped more by scarcity of analogue spectrum than necessarily by the market. Brands have been built as much on the frequencies they occupy as much as the characteristics of their content, and commercial revenues have tended to stay limited to local markets.

We very much support the move to digital switchover, both because we believe it is important obviously to upgrade the technology, but because we also think that it will encourage plurality and expand listener choice. We have got to be concerned that people will be ready before any switchover takes place and that there won’t be literally millions of analogue radios which suddenly become redundant. As you know, the government has set a provisional target date of 2015 and we are sceptical about whether that target can actually be met. That is not to say that we are sceptical about digital switchover. We simply think that 2015 might be too ambitious. But we are delighted to see that Ford Ennals is now chief executive of Digital Radio UK, after having steered digital television switchover so successfully, and we hope that all hurdles can be overcome.

We hope that the advent of new digital stations will bring significant new opportunities for independent radio production and it will also free up commercial radio spend. At the moment, as I understand it, the commercial sector spends nearly 10% of its annual revenue on analogue transmission. In the battle for ratings in the new digital world, we would hope that great programming would be at the forefront and that therefore a good proportion of the £40m annual cost of analogue broadcasting will go to independent radio production.

At the moment, the BBC holds four out of the five available national FM licences, and it has the only national digital multiplex. So the aspiration as we move over to digital is as much about making more space for plurality in radio broadcasting as it is about new technology. And if new stations are broadcast, we hope there is plenty of scope for new exciting radio production.

We are also keen obviously not to switch off FM, but to maintain FM as a spectrum particularly for local radio. As you are probably aware, there has been a lot of lobbying during the passage of the Digital Economy Bill about that. I’m pleased to say, as well, that some of the new technology that seems to be coming on-stream, with radios that can switch seamlessly between digital and FM broadcasts, will ensure that there will still be a place for ultra-local FM broadcast stations.

Obviously, many of you will also be interested in what will happen with the Digital Economy Bill as we approach the dissolution of Parliament. My understanding is that the Second Reading will happen on the 6th of April, which I think is also the date that Gordon Brown drives up the Mall to see the Queen to call for the dissolution of Parliament if he wants an election on the 6th of May […] We will have this rather surreal Second Debate in the House of Commons and then we will go straight into what is now called the ‘wash up’ where we horse-trade over the various clauses of the Digital Economy Bill to be passed by the 8th of April. But I can assure you that the deregulation of radio clauses in the Digital Economy Bill have strong cross-party support so, if anything is going to go through, it will be those clauses.

[…]

Q&A

Q: It’s interesting that you touch on digital radio as a platform going forward. Once we find the larger stations, commercial and the BBC, make the switch to digital, and they leave the FM spectrum, do you feel that the majority of listeners will move to digital radio when they vacate their homes, as most cars don’t come with a DAB receiver, so obviously the commercial sector and the BBC are going to be losing listeners because the majority of times listeners tune in to these station is in the car? Furthermore, with DAB, it’s reported and seen by some people in the media/press as being a failed format, competing with new technologies such as DRM. With these changes, do you think that, when people do make the migration to DAB, that smaller stations are going to lose out and that the money from the commercial side is going to be re-invested in programming and we’re not going to lose the quality of the content…

A: Well, I think the problem in the last few years has been a kind of half-way house, so people weren’t really sure what the future of digital radio was going to be, particularly with commercial radios stations that were having to make a double investment which was costing them a lot of money, so we supported the government in making a firm decision that we were going to move over to digital switchover. As I said in my remarks, I think that 2015 might be a bit ambitious.

Your particular point about converting cars to digital radio is, I think, the crucial point. We have got to get to a stage where new cars are fitted – as the French have now mandated, for example – with digital radios and that it gets easy to convert to digital in the car. I think that 2015 is going to be ambitious, but that does not mean that we are sceptical about switchover.

The other point about FM, as against DAB. I think that there will be… There are radios on sale now that switch seamlessly between FM and digital as if you were simply changing channels. I think that, particularly as FM will then be, broadly speaking, a spectrum used by the local radio stations, that won’t be such a problem if you’ve only got a digital radio in your car, as you tend to listen to a local radio station when you’re at home – or you can de-construct that remark. The point you make about whether DAB is the right technology or whether we should be using DAB+, to a certain extent I slightly take the view that we have gone down this road, so let’s leave it. I think the pain of trying to move to DAB+ or beyond will be too much, given how far we’ve come.

Q: I also found it quite interesting that you had the idea that there were going to be more digital-only services. In the past, we have seen digital services such as Capital Life and Core which have come and now gone again because they were not commercially profitable. Do you think that is not going to have an impact when most people make the migration to DAB? Do you think that the local full-scale FM operators are going to suffer?

A: Er, well, er, I hope that they won’t. There will be a distinction between national or big regional radio stations and local stations, and there is already a distinction between local and community which is ultra-local. As I say, we want to put in place a platform that will also enable cross-media ownership at a local level that will enable local media companies to create scale. So, what I hope is that, across the range of media. there will be opportunities for any good radio station that is likely to command a loyal audience – whether that be an ultra-local audience, a regional audience or a national audience – because, in terms of Capital Radio coming and going, I think that was frankly a symptom of that we were in a half-way house about digital. We need to drive digital, which I think is now underway.

[…]

Government: digital radio switchover in 2015 “still on track”

Tony Lloyd MP Manchester Central
Chair of the Parliamentary Labour Party
23 March 2010 @ Imperial War Museum North

One of the commitments that the government has already made is the switchover to digital [radio]. That will go ahead, although it will go ahead dictated by the pace of change that the markets themselves will involve. You know the ground rules for that. I was talking to a multimedia producer who just tells me she can’t get digital radio in her own home. Now this is still one of the big issues because, until we have got 90% coverage of the country and until we see something along the lines of 50% of people using digital, that switchover won’t take place. But all the evidence is that we are still on track for that switchover to take place by 2015.

The second debate within that is how is that paid for, how far will the commercial sector – the commercial radio stations – be prepared to pay to invest in the digital networks and how far will the BBC contribute? Because what is clear is that there always will be a role for the BBC to fund because there will be parts of the country where the commercial sector simply won’t take that process forward.

We know that the analogue [radio transmission] system, even if we do nothing at all to maintain it, will require investment of the order of £200m simply to keep the existing networks up and running and that money frankly is better spent on the switchover to digital and, of course, there will be consequential changes in terms of the licensing framework at the point of switchover.

[…]

This government, the Labour government, once re-elected, probably on May 6th ….