Tag: DAB

Digital Radio Upgrade & the Digital Economy Bill

Westminster eForum Parliamentary Reception
Terrace Pavilion, House of Commons, London
28 October 2009 @ 1600

“The informal discussion that takes place can be expected to cross a range of current policy issues but the chosen theme is digital switchover and DAB.”

JOHN WHITTINGDALE MP, Chairman, House of Commons Culture, Media & Sport Select Committee:

The future of radio is very much a topic under debate. My Select Committee is currently conducting an inquiry into the future of local and regional media, of which radio is an absolutely critical part. So yesterday we were hearing evidence from Andrew Harrison of RadioCentre, Travis Baxter [of Bauer Media] who is here somewhere today, and Steve Fountain from KM Group. And we are very much aware of the pressures on commercial radio and the difficulties faced. But, at the same time, there are opportunities. And when Digital Britain came out, much of it had been trailed in advance, a lot of it quite controversial – things like top-slicing and file-sharing legislation – but the one bit which came as something of a surprise, I think, was the announcement of the date for Digital Radio Upgrade. Certainly, when I saw that in the Report, my immediate reaction was rather like the ‘Yes Minister’ Permanent Secretary who said: “That is a very brave decision, Minister”.

It is going to be challenging. It is slightly controversial. Not everybody in the industry is 100% yet signed up to it. Equally, there is a cost attached and we can have interesting debates about who is going to pick up the bill for it. And there will be quite a task to persuade people. In the same way that we had to work hard to persuade people that analogue switch-off of television was going to be beneficial, I think the task to persuade people in the case of radio is going to be even greater, particularly whilst we still have the overwhelming majority of cars with analogue radios in them. So there are challenges, but equally there are going to be benefits.

We heard yesterday about the costs to radio of having to transmit simultaneously in both analogue and digital and, clearly, that is something which would be reduced if we managed to get switchover. So this is a very important debate and I am keen that, when we come to debate the Digital Economy Bill when it is introduced, we should not overlook radio. There is always a danger that everybody focuses on television and there will be a huge argument about whether or not the BBC should be the exclusive recipient of the Licence Fee, and whether or not we should be trying to stop teenagers in bedrooms file-sharing, but it is important we should also debate radio and, certainly, that is something which I will try and do my best to ensure happens. But I think this afternoon is a good start to that and it is good to see so many people from the industry assembled in one room. So that’s enough from me, just to say welcome to the reception this afternoon …..

PAUL EATON, Head of Radio, Arqiva:

I would like to welcome you all as well on behalf of Arqiva and Digital Radio UK. Arqiva is part of Digital Radio UK, with the BBC and commercial radio, and I am very pleased to be joined today by Andrew Harrison, chief executive of RadioCentre, and Tim Davie, director of Audio & Music at the BBC.

Digital Radio UK has been formed by the radio industry to get the UK ready for the Digital Radio Upgrade. That upgrade is vital because radio faces a stark choice – we can either stay in the analogue world or we can move forward into the digital one. Both need considerable investment from all of the players but only one, digital, can give radio that exciting future that listeners deserve. Digital radio will mean more choice, a better quality listening experience and the kind of interactivity that we can only dream about today.

We all know that the road ahead is a difficult one. We know that the coverage is not good enough yet, we know that we haven’t got digital radio in enough cars, and we know that we need to get converters onto the market to turn analogue radios into digital ones – set-top boxes for radio, if you like. We know that there is new content and new services that need to go digital. So there’s a lot to do. But, in creating Digital Radio UK, the radio industry is demonstrating that it is serious about the digital future and is determined to address the issues and, in doing so, give the digital future that listeners deserve.….

SIMON MAYO, Presenter, BBC Five Live:

I had one of those “blimey, you’re old” moments this morning. I was talking about radio with my son – my eldest son is eighteen – and I asked him what he listened to and what his friends listen to. He thought for a moment and then he said “none of my friends have got a radio”. I thought that was quite an astonishing moment. Now, obviously, he is an unrepresentative sample of one, that is true. They kind of know about radio and they might listen online, and it’s on in the kitchen and they hear it in the car and they have an opinion of [BBC Radio One breakfast presenter] Chris Moyles, but that was it. It occurred to me that, really, radio has got a bit of a fight on its hands, which is where the kit here [points to display of DAB radio receivers] comes in, I think.

My parents’ generation didn’t need to be told that radio was fantastic. My father, if he was here, would talk about listening to Richard Dimbleby and Wynford Vaughan-Thomas and The Goons. The Goons generation didn’t need to be told that radio was great. The 60s generation didn’t need to be told that radio was great – they had the pirates, then they had Radio One. My generation fell asleep listening to the Radio Luxembourg Top 40 on a Tuesday night. It finished at 11 o’clock and that was quite daring – I see a few people nodding. That was quite daring staying up to 11 o’clock, and the fact that is was sponsored by Peter Stuyvesant cigarettes was even more dangerous. But we remembered it and we fell in love with radio, and I think there is a job to be done to make future generations fall in love with radio.

So enter digital. Partly that has to be done by the broadcasters in coming up with exciting new stations filling gaps that don’t exist. BBC7 is wonderful. Everybody will have their own particular favourites. Absolute Classic Rock is really rather good. If you want Supertramp and Led Zeppelin any time of the day, that’s the place to go. Really good stuff. There are some really big gaps that need to be filled, but that’s exciting. Analogue is full, so digital is the place to be.

But the kit is really exciting. If you have a radio when you are listening to a piece of music …. and you’re listening to the radio and an Angelic Upstarts track comes on, you press a button and it sends you an e-mail that tells you that they have reformed, you can buy their records and this is where they are playing. Or someone is listening to ‘Yesterday In Parliament’ and they hear a speech from a parliamentarian that they like, and they think “he’s interesting, she’s interesting”, press a button, you get sent an e-mail and it tells you who it is, how you can contact them – this sounds quite exciting. If you are listening to one of [presenter] Mark Kermode’s film reviews on Five Live, and you like the sound of the film, you press a button, and its sends you an e-mail, you go to your in-box and it’s got an e-mail telling you where that film is on, how you can go to see it, maybe a link to the trailer. All of that kind of information means that radio has got an exciting future, but it just means that we have to go out and explain it a bit more because people might not get it the way they used to.

Hopefully, there is still a role for the humble presenter. So you do a little bit as well. Thank you very much indeed for coming…..

[A Digital Radio UK factsheet entitled “A briefing on the digital radio upgrade” was distributed at the event. Click here to view.]

Digital platforms: commercial radio losing share to BBC

Today’s RAJAR data demonstrates that a gulf is opening up between BBC radio and commercial radio in their ability to attract listening to digital platforms. Over the last year, the BBC is accelerating away from commercial radio in its audience’s usage of DAB, digital television and the internet to listen to live radio programmes. The significance of this growing gulf is reinforced when one remembers that the main RAJAR survey, from which the data below is taken, only measures ‘live’ radio listening and does not incorporate listening to either time-shifted, on-demand radio (‘listen again’) or to downloaded podcasts, both forms in which the BBC offers a much greater volume of content than UK commercial radio.

The danger here is that the BBC is poised to dominate listening on digital radio platforms in the long term, exactly as it already dominates listening on analogue radio platforms. One of the main reasons that the commercial radio sector invested so heavily in digital platforms during the last decade was the opportunity it offered to compete more effectively with the BBC for audiences. In the analogue world, the commercial sector has always argued that the BBC (having been there first) was allocated more and better spectrum for its radio stations. ‘Digital’, particularly DAB, seemed to offer the commercial sector a chance to ‘even the score’ with the BBC. The RAJAR data show that this ambition is not succeeding.

Across all digital platforms aggregated, commercial radio is losing ground, with the latest quarter (Q3 2009) reducing its share of listening to 41%, versus the BBC’s 56% share.

Taking each digital platform in turn, commercial radio’s share of listening on the DAB platform fell to 33% in Q3 2009, compared to the BBC’s 65%. This is not surprising because the age profile of DAB purchasers tends to be older listeners who are statistically more likely to listen to BBC stations. However, it does pose a grave question as to the return that commercial radio can expect from its substantial investment to date in DAB infrastructure, if listening on that platform is dominated so much by the BBC.

The digital TV platform is one that commercial radio has long dominated because of the large amount of spectrum it leased in the early days of Freeview. However, the increasing popularity of digital terrestrial television has already substantially increased the cost of spectrum on Freeview for the radio industry when its contracts come up for renewal. Furthermore, the forthcoming re-ordering of the multiplexes to accommodate HD television and new compression codecs is likely to squeeze commercial radio’s access to Freeview spectrum even more so. Before long, it is likely that the BBC will dominate the digital TV platform, just as it already does on DAB. Presently, the BBC has a 45% share, compared to commercial radio’s 51%.

As might be expected, the BBC’s strong online presence has already put it in the commanding position in terms of its share of listening via the internet platform. The integration of BBC radio into the iPlayer has no doubt helped as well, whereas commercial radio’s offerings are relatively more fractured and less heavily marketed, despite the excellent innovation of the RadioCentre Player. The BBC has a 50% share of listening on the internet platform, compared to commercial radio’s 37%.

The significance of commercial radio’s diminishing share of these three digital platforms is demonstrated when we look at the two sectors’ listening shares achieved on the analogue platform alone. Once one removes the digital platforms from the picture, it is evident that the shares of both the BBC and commercial radio have remained relatively stable in recent years. In other words, it is commercial radio’s declining share of listening on digital platforms that is effectively pulling the sector’s total share of listening (analogue + digital) down, particularly as digital platforms are growing as a proportion of total radio listening (21.1% in Q3 2009).

There is a paradox here. The commercial sector invested heavily in the DAB platform, believing that the new technologies would help it INCREASE its overall share of radio listening versus the BBC. In fact, that investment has recently helped to DIMINISH commercial radio’s overall share of listening. Digital television remains the only platform in which commercial radio dominates, and yet this is the very platform where commercial radio will be forced to cede spectrum and face, once more, losing out to the BBC whose spectrum for radio is guaranteed.

It is important to emphasise that these graphs show only the SHARE of listening on these platforms. The volumes of listening on each of these platforms have demonstrated absolute growth for both commercial radio and for the BBC over the same time period. But, more than any other digital platform, it is significant that the DAB platform is dominated by the BBC which now accounts for almost two-thirds of its usage. Such data is important when making decisions about the potential returns on further investments in DAB infrastructure. Will further investment simply maintain the existing imbalance, or will it really improve commercial radio’s share? Does investment in infrastructure also require parallel investment in new content that will appeal directly to the older age groups who own DAB radios?

Some possible reasons for commercial radio’s diminishing share of listening on digital platforms include:

• Commercial radio’s tendency to invest in DAB infrastructure more significantly than in original digital-only content
• Recent closures of many digital-only radio stations in the commercial sector
• The BBC’s relatively stable resource base, at a time when commercial radio revenues are falling precipitously
• The BBC’s long-held policy to invest simultaneously in multiple platforms, whereas commercial radio has focused on DAB and, to a lesser extent, Freeview
• The BBC’s focus on creating exclusive digital-only content unavailable on the analogue platform
• The BBC’s 360-degree music royalty agreements which allow it to use diverse platforms, whereas commercial radio requires separate (and more restrictive) agreements for time-shifted content and podcasts
• The BBC’s long-term, consistent promotion of content and digital platforms across TV, radio and the internet whereas commercial radio is less willing to cross-promote content or digital platforms that migrate listeners away from its core analogue offerings
• Frequent management changes and ownership changes in some parts of commercial radio, where substantial consolidation has often translated into short-term ‘slash and burn’ rather than ‘invest and build’ policies.

Whatever the reasons, we are not where we were meant to be – that is, we are not where it had been anticipated more than a decade ago commercial radio would be when investment in digital platforms, notably DAB, was expected to produce a beneficial outcome for commercial radio audiences versus the BBC. To put it plainly, the strategy conceived in the 1990’s has not worked. Commercial radio offerings do not dominate digital platforms (yes, they are more numerous, but they do not attract more hours listened than the BBC). DAB has become a largely BBC platform.

So, what can be done? Some of the issues noted above require a more level playing field to be established between commercial radio and the BBC. One such example of a practical solution is the Radio Council plan for a new UK Radio Player that will offer BBC and commercial radio content from a single aggregated access point. Other issues remain mostly in the lap of the gods (revenues, for example). Some issues require the BBC to be less predatory (or more regulated) and for the commercial sector to be more focused on strategic, long-term objectives (such as an online strategy that is more than simulcasting).

There is no single answer to this complex problem, though the commercial radio sector is hobbled by both its present lack of profitability and the regulatory strings that are attached to the majority of its analogue radio licences. What is desperately needed in these difficult times is not minor regulatory tinkering (such as adjusting how many hours of local content a local station is required to broadcast) but a wholesale change in strategy to maintain a commercial radio sector that can thrive in the digital marketplace we now inhabit. Will the imminent Digital Economy Bill prove sufficiently forward-thinking in its radio policy proposals?

[Statistical note: The graphs above to do not sum to 100% because the minimal amount of platform data released by RAJAR is ‘rounded’ (hours listened to 1,000,000; listening shares to 0.1%) and the listening apportioned to the BBC and commercial radio sometimes does not add up to the total for a platform. Some of this shortfall may be accounted for by ‘other’ listening (neither the BBC nor commercial radio) which is not itemised by platform. Data for individual quarters are therefore somewhat inconsistent, though the trend over several quarters is likely to be indicative. Additionally, there is an element of radio listening unattributed to any platform, 12.8% of the total in Q3 2009, but which is roughly equally applicable to BBC radio and commercial radio.]

Culture Secretary speaks about digital radio

The House of Commons Culture, Media & Sport Committee
20 October 2009 @ 1100 in the Thatcher Room, Portcullis House

John Whittingdale MP, Chairman [JW]
Ben Bradshaw MP, Secretary of State, Department for Culture, Media & Sport [BB]

JW: You have announced very ambitious plans to deliver the Digital Radio Upgrade programme by 2015 and have most of the national stations to move off analogue to digital by then. That will require extensive investment in the digital transmission network. What estimate do you have of what it is going to cost to do that?

BB: The current estimate that we are working on is about, I think I’m right in saying, is it £10m per year to build out the DAB multiplexes? Is that the figure that you were interested in?

JW: Actually, the one I’ve heard is rather more than that. Where is that money going to come from?

BB: It will come from a mixture of sources. We expect the BBC to play a significant role in this, commercial radio, and there may be public funds as well.

JW: I think the current state of commercial radio means that their ability to invest any more is almost zero. Do you foresee, therefore, further government investment, maybe from the Licence Fee?

BB: We are not currently intending to spend …. [laughs] That’s one of the things we are not intending to spend a share of the Licence Fee on, but if there is an even bigger underspend in the Digital Switchover Programme than we are currently expecting, who knows, Mr Chairman?

JW: The Digital Switchover Programme appears to be earmarked for quite a large number of purposes.

BB: [laughs] Well, there is quite a significant underspend.

JW: But you are confident that it can be delivered. And what are you going to say to all the people that haven’t bought a new car in the last two years by 2015?

BB: We are working with the motor manufacturers, both to ensure that future new cars do [have DAB radio], but also to ensure that there is this – I can’t remember what it is called – but it is some sort of gadget that you will be able to use in your existing car to make sure that you can pick up digital radio. One of the things we say quite clearly is that we won’t go ahead with this unless, by 2013, certain conditions are reached ie: we have more than 50% digital radio ownership and that [DAB] reception on all of our main roads is not going to be a problem. So we have put conditions down but, at the same time, we felt that it was important to provide market certainty that we specified an end-date by which time this should happen.

[excerpt]

[A further meeting of the Culture, Media & Sport Committee will be held in the same room on Tue 27 October from 1030 to discuss “The future for local and regional media”. Andrew Harrison of RadioCentre, Travis Baxter of Bauer Radio and Steve Fountain of KM Radio will give evidence.]

GERMANY: National public radio to end DAB broadcasts year-end

At the end of September 2009, the Radio Council of Germany issued a public statement in which it objected to the withdrawal of further funding for DAB radio by the KEF [the organisation that allocates funds for public radio] in July 2009 (reported here) and it made a direct appeal to the Prime Minister to create an independent digital platform for radio broadcasting. It said the rollout of DAB+ to replace DAB would now be cancelled. It argued that the phased closure of analogue radio broadcasting between 2015 and 2020 was realistic and that the government should adopt a legal framework for digital radio migration.

Now, in an interview this month with ‘Digitalmagazin’, the director of Deutschlandradio (German national public radio) Willi Steul confirmed that its two national stations will end broadcasting on the DAB platform at the end of 2009.

Digitalmagazin: ‘Deutschlandradio Kultur’ and ‘Deutschlandfunk’ will not be available on DAB radio after the end of the year. What led to this bitter decision?

Steul: We need to face up to the fact that the KEF removed funding for further DAB broadcasting, including the DAB broadcasts of our two channels. This is all the more regrettable because DAB will no longer be available for the digital distribution of our new, knowledge-based, educational station.

Digitalmagazin: To what extent does this sound the final death knell for DAB?

Steul: So far, not yet. However, DAB – although vital – is in intensive care and living a sad, hospitalised existence. A paradoxical situation!

Digitalmagazin: We are meant to be re-launching with DAB+. Is this country making the transition to the age of digital radio, or will Germany remain an ‘analogue island’?

Steul: At the moment, we are on the low road to becoming a glorious analogue island. In the medium- and long-term, there is no alternative to the age of digital radio. Let’s see when the powers will be prepared to take responsibility for media policy and offer some certainty.

Digitalmagazin: The Radio Council has criticised the KEF decision as “unacceptable interference in the broadcasting policy of the German states”. Why?

Steul: The role of the KEF is to identify the financial needs of the public service broadcasters. Its job is not to forge media policy, even when there are fiscal issues, as with DAB. This is unacceptable.

Digitalmagazin: But is it not the responsibility of the KEF, in the absence of sound arguments – and this seems to be the case with DAB – to pull the plug?

Steul: You mean ‘economically’? If you invest properly for the future, you cannot expect immediate returns on your investment. The essence of investing is that money needs to be spent on innovation and a process of transformation that will only bear fruit at a later date. The digitisation of radio is, in many ways, a lengthy process and so it is premature to pull the plug now and jeopardise the investments made to date. This is definitely not economical!

Digitalmagazin: The [KEF] budget for digital radio has not been scrapped, but assigned to new initiatives. What options are there now for digital radio?

Steul: Digital radio is already available via cable and satellite. Also, internet streaming has a great future. There will be further developments, particularly in mobile internet access. At the moment, internet ‘on the move’ – in spite of flat tariffs – is still a very expensive pastime.

[cut]

Digitalmagazin: The Radio Council considers it is realistic to propose a switch-off of analogue radio between 2015 and 2020. How will this be achieved, given the estimated 300 million FM receivers in Germany?

Steul: It will not happen without appropriate incentives for the transition from analogue to digital. Such issues are not the major responsibility of radio people. They are an issue for media policymakers and receiver manufacturers. When people are offered something of interest to them, they will give up their old FM radios. Examples from other sectors should encourage us.

NORWAY: Government commissions cost analysis of FM switch-off

In April 2009, NRK [state radio] chief Hans-Rore Bjerkaas had written to the Culture Minister asking if the government could persuade consumers to purchase DAB radios rather than analogue radios. He wrote: “In order to reduce consumer disappointment in the final stages of digital migration, a clear political signal must be given that, when choosing a radio, an FM/DAB radio should be selected rather than a pure FM radio.”

Culture Minister Trond Giske responded: “My responsibility lies with radio listeners. There are two reasons why I think we should progress more slowly than with the introduction of digital TV. It will be more costly for consumers to switch to DAB because most people have multiple radio receivers. In addition, there is no significant improvement in audio quality. When half the population has purchased a digital radio, we would be willing to discuss a specific date for switching off the FM network.” At present, 17% of the population in Norway has a DAB radio.

This month, the Culture Minister reiterated that the government will not consider switching off FM until half the population has purchased a DAB radio. Both NRK and P4 [commercial network owned by MTG] have told the minister that their existing FM networks are expensive to maintain and that they want to move to DAB as quickly as possible. NRK spends NRK120m per annum on FM radio transmission. Transmission provider Norkring [owned by Telenor] says it will need to make a major upgrade to the FM network in 2014 to keep it in service. So the government has tendered for an “independent and expert” assessment of the costs associated with switching off FM broadcasts in either 2014 or 2020. The analysis will be part of the White Paper on digital radio to be published by the government next year.

SWEDEN: digital radio to be distributed by digital TV network, not DAB+

In December 2005, the Swedish government had announced that it would not expand the existing DAB radio transmission system that already covered 85% of the country and would not propose a consumer migration from FM to DAB radio. Instead, it suggested that the radio industry should focus on a mix of digital platforms including podcasts, mobile phones and distribution via TV.

In June 2008, Sweden’s broadcasting authority suggested to the government that the DAB+ codec should replace the country’s existing DAB system. However, the government’s IT consultant Patrick Fallstrom said that both DAB and DAB+ were an old-fashioned solution and that today’s consumers were more likely to listen to audio via the internet, mp3’s or their mobile phone.

Now, speaking at the recent ‘Radio Day of European Cultures’ event, Swedish culture minister Lena Adelsohn Liljeroth stated that there is no need for a DAB+ radio network in Sweden. Instead, she proposed that digital radio be carried on the existing DVB-T digital television network which is about to be upgraded to DVB-T2, creating 80% more space for high definition TV and radio channels. Test transmissions of DVB-T2 are scheduled to start in Stockholm and Uppsala before Christmas.

The perceived advantages are: no dual TV/radio transmission system, reduced transmission costs, the digital TV transmission network is already built, DVB-T already provides better coverage (99.8% of the population) and sound quality than the DAB network, increased energy efficiency, plenty of available spectrum, and mobile reception is supported (cars and phones). The perceived disadvantages are: the DVB-T2 system is not yet established, no radio receivers have yet been developed, and there is no lobby group for the system (as there is for DAB+).

One Swedish media commentator noted: “We do not need more transmission networks in Sweden. We must share the resources that we have. This is what I hope the government has understood. It seems as if it has. … It is clear to me that Swedish state radio should not be trying to build its own distribution mechanisms, and especially not its own transmission networks. Its money should be used as efficiently as possible to ensure that Swedish state radio programmes can be heard in as many places as possible. This would include DVB-T2, mobile phone networks, the internet, and FM for the foreseeable future.”

Per Gulbrandsen of Swedish state radio commented: “The government is providing no more money for digital broadcasting and wants the market to decide upon the digital migration of radio. But it is no secret in the industry that the Ministry of Culture dislikes the ageing DAB digital radio system, even in its newer DAB+ form.”

Digital radio in France: cold feet, no funding, sue the regulator

On 10 September, the French secretary of state responsible for the digital economy, Nathalie Kosciusko-Morzet, organised a seminar “Digital: investing now for tomorrow’s growth”. The objective was to lay out to the 1000 attendees the costs and opportunities necessary to create an integrated digital economy.

On 16 September, Jean-Luc Hees, head of state broadcaster Radio France, addressed the National Assembly’s Committee on Finance & Cultural Affairs. He told them that the broadcaster’s advertising revenues were forecast to decline in 2009 by 20 to 30% year-on-year (advertising comprises 8% of revenue, the remainder from the state). He said that the rollout of digital radio in 2010 would require adding 2m to 3m Euros to the budget.

Hees told the National Assembly: “We now know fairly well the timing of the introduction of digital terrestrial radio, with launches in the coming months in three areas – Paris, Marseille and Nice. …. Our goal is to achieve 95% coverage of France by the end of 2013, according to the CSA’s [France’s media regulator] schedule. …. We must understand that everything has a cost, and the impact on Radio France’s finances means that this house will have to fund dual transmission [analogue and digital] for some time. Analogue transmission presently costs Radio France 80m Euros per annum. The rollout of digital radio will entail additional costs and this is one of the things that require funding in our next budget. I want to emphasise this.”

Amongst commercial radio operators, opinions on digital radio appear increasingly ambivalent. Franck Lanoux, deputy director of NextRadioTV said that digital radio “will not affect 95% of radio listening. It’s hard to identify how digital radio will develop – the receivers do not exist, yet the broadcasters are being asked to make significant investments. Consumers have nothing to listen with.”

The publication mediasactu commented this week that digital radio in France has become ensnared in a quagmire and that reservations amongst commercial broadcasters are becoming stronger:

“After putting all their weight behind persuading the government to adopt the T-DMB standard for digital terrestrial radio in December 2007, which is now nearly two years ago, radio broadcasters, particularly those that are members of GRN [France’s Digital Radio Group] and the Bureau de la Radio [France’s newly created radio trade body comprising the four largest commercial owners], are much more dubious about the real chance of succeeding with the transition to digital radio. Although they were unwavering only a few months ago, now major national radio groups, along with SIRTI [the French broadcasting trade union] and the regional stations, seem determined to thwart digital radio, or at least seriously slow down its development. Angered by the CSA’s decision to only select a handful of new markets to launch digital radio, as well as the costs that will be inherent with dual transmission for several years, not to mention the CSA’s cancellation of applications for 16 of the first 19 areas designated for digital radio, the broadcasters are now showing real reluctance.”

“The [radio] sector, already suffering from its current lack of revenues, is still waiting for the financial aid promised by the government to fund the migration to digital radio. Now, it seems clear that the total cost of the implementation of digital radio will be made greater by the choice of the T-DMB standard by the Ministry of Culture, at the request of GRN, and that the rollout will be much more expensive than it would be for the DAB+ standard. Moreover, according to our sources, the major radio groups are now putting all their weight behind challenging the decision of the CSA about the channel composition of the first multiplexes in order to delay their launch and buy extra time. According to our sources, some have already initiated legal action against the CSA.”

At the government seminar on 10 September, CSA president Michel Boyon reportedly took the opportunity to try to ‘save’ digital radio, suggesting that part of a new significant loan raised by the French government should be allocated to the rollout of digital radio. But, as mediasactu commented:

“The problem is whether public funds can be used to finance the construction of radio networks intended to broadcast commercial stations. Will the public agree to fund not only a digital transmitter network for commercial radio, but also the purchase, at great expense, of receiver hardware that offers a range of stations almost identical to what is already offered on FM?”

Interviewed in Le Figaro, RTL president Christopher Baldelli said:
“The timetable [for digital radio] will be respected if the CSA believes it is right, but migration to digital terrestrial radio is not a matter of principle. It involves a different economic issue than digital television. One impact is higher transmission costs, at approximately 3m Euros per channel, costing us 12m Euros for the whole [RTL] network (RTL, RTL2, Fun Radio, RTL-L’Équipe). The economic difficulty must be taken into account. It is a matter for the radio groups, the CSA and the government. It will take a lot of consultation.”

As mediasactu concludes in its article:
“Overtaken by the internet, mobile phones and MP3 players, does digital terrestrial radio still stand any chance of seducing the general public?”

The demand for DAB radio: where is it?

Most of the current debate on the challenges facing DAB radio seems to be focused on ‘supply side’ issues, such as upgrading existing DAB transmitters, making DAB radio receivers available in cars and the creation of another national DAB multiplex. Surprisingly little of the talk is about the ‘demand side’ issues facing the DAB platform. What are consumers demanding from DAB radio? And how great is that demand?

There are two types of consumer demand for DAB: the demand for content broadcast on the DAB platform, and the demand for DAB radio receiver hardware. The two are inextricably linked. Consumer demand for DAB hardware is largely a function of demand for DAB content. You will only want to buy a DAB radio if you believe there is something interesting enough to listen to on it. Let’s examine some of the available data on these two issues.
  
Consumer demand for DAB content
  
Nobody is going to be motivated to spend money on a DAB receiver for listening to the radio if the platform only offers the same content already available to them on analogue receivers. Therefore, it must be the exclusive digital-only content available on DAB (and other digital platforms) that will persuade consumers to both use the DAB platform and to purchase a DAB radio receiver.

So how dissatisfied are consumers by the radio content choices (the range of radio stations) available to them on existing analogue radio receivers? Ofcom research shows that 91% of adults are satisfied with the existing choice of radio stations offered to them (see chart below), a proportion that has risen in recent years. This demonstrates that dissatisfaction with existing radio provision is extremely low, making it very difficult for any new platform to attract a substantial audience by offering content that will gratify consumers’ few unsatisfied demands.

[In case you are wondering if the increasing satisfaction with radio stations might be a direct result of the exclusive digital-only stations already offered on the DAB platform, it is worth noting that only 3.9% of hours listened to radio are attributed to digital-only stations [RAJAR 2009 Q2].]

Ofcom data shows that the average consumer listens to very few radio stations. Two thirds of the population listen to only one or two different radio stations in an average week, and the majority of these two-thirds listen to only one station. So, not only are the overwhelming majority of consumers satisfied with their existing choice of radio stations, but most people listen to a very narrow menu of stations.

These phenomena are not the outcome of consumers only being offered a limited choice of radio stations on the analogue platform. Ofcom data demonstrates that, in addition to the 5 BBC radio stations and 3 commercial radio stations available nationally on analogue radio (with near universal coverage) in the UK, there are a significant number of local radio stations available to consumers in most areas of the UK. The average consumer in the UK has a choice of 8 national radio stations and 6 local radio stations.

This existing wide choice of radio stations makes the plan for migration to digital platforms very different for the radio medium than it is for the television medium. In the UK, only four (five in some areas) TV stations are available via analogue, making the wider choice available on digital platforms seem very attractive to consumers. Whereas, in radio, an average 14 stations are available to consumers on analogue, and these are already satisfying the vast majority of consumer demands. As a result, there is only a very tiny untapped consumer market for radio content not already available via analogue.

This is demonstrated by analysis of the largest UK radio market, London, in which consumer choice is at its greatest. There are 29 licensed radio stations available on the analogue platform in London (excluding community radio and out-of-area stations), but the top 3 stations account for just under a third of all radio listening in London, and the top 6 stations account for almost half of all radio listening. The radio market in London, as in most of the UK, is dominated by a tiny number of mainstream stations, whilst the remaining radio offerings comprise a ‘long tail’ that fulfils more specialist consumer needs.

 The dramatic consumer skew towards mainstream radio means that, even in a radio market as developed as London, it proves difficult for incremental, digital-only stations to draw significant amounts of listening. The most listened to exclusively digital radio station in London is BBC 1Xtra, which ranks 22nd and attracts only a 0.5% share of listening in the market [RAJAR 2009 Q2]. 1Xtra’s content (UK black music) is barely duplicated by any other legal radio station available in London, and yet its ‘success’ remains slight in a very multicultural market that is already crowded with myriad radio options for consumers. The recent decision by London station Club Asia to enter administration, combined with the closures earlier this year of South London Radio and Time 106.8, demonstrate the challenge for stations to find a ‘monetisable’ audience in London, even on the analogue platform.

It might be easy to assume that Londoners, offered the widest selection of radio stations on the analogue platform, would be more satisfied with their choice in comparison with consumers in other, less well served parts of the UK. The surprising result from Ofcom research is that Londoners are, in fact, less satisfied with their choice of radio than most other parts of the UK. The chart below (extracted directly from a recent Ofcom report) demonstrates that satisfaction with existing radio provision is almost evenly spread across the whole UK, but consumers in London and Northern Ireland are the least satisfied.

In summary, radio in the UK has been a victim of its own success. The universal availability of a range of both BBC and commercial ‘national’ stations, combined with the extensive choice of local stations available in most markets, mean that consumers are already relatively spoilt for choice on the analogue radio platform. There is very little unsatisfied demand for radio content because the UK already has such a comprehensive choice of radio content on offer. As a result, any new radio platform (DAB, satellite, online, etc) is going to find it hard to compete with the high quality and diverse choice of what is already on offer.

This was always going to make it tough for the DAB platform to entice consumers to purchase DAB receivers as anything other than a ‘replacement’ for their existing analogue radios. Unfortunately, the natural replacement cycle for radio receivers is so slow (maybe ten years or more) that it will never prove sufficient for a complete UK digital switchover to be co-ordinated for radio, as is happening in the television market. The UK has some of the best radio in the world – ironically, this has been our digital downfall.

Consumer demand for DAB radio receivers

As noted earlier, consumer demand for DAB hardware is largely a function of demand for DAB content. You will only want to buy a DAB radio if there is something interesting enough you want to listen to on the DAB platform.

Ofcom research demonstrates clearly the lack of interest amongst consumers in purchasing DAB radio receivers. In this year’s survey, only 16% of consumers (without a DAB radio) say they are likely to purchase a DAB radio within the next 12 months. Two years ago, 19% said they would be likely to purchase a DAB radio within the next 6 months. This is very bad news for manufacturers and retailers of DAB radios. Worse, this year not only do 64% of consumers say they are unlikely to purchase a DAB radio, but 20% say they don’t know – a demonstration that a DAB radio is far from being a ‘must have’ gadget on consumers’ wants lists.

The data for current levels of DAB radio receiver ownership are not very helpful in determining the demand for DAB radio receivers. The quarterly survey by RAJAR found in 2009 Q1 that 32.1% of adult respondents claimed to own a DAB radio. However, the annual Ofcom survey found in the same quarter that 41% of adult respondents claimed to have a DAB radio in their household. This disparity between the results from RAJAR and Ofcom would appear to be widening over time.

The uncertainty in the data regarding ownership levels of DAB receivers is not surprising, given the evident level of consumer confusion. Firstly, many radios on the market have the words “digital” or “digital radio” written on them, meaning that they either incorporate a digital clock (for radio alarm clocks) or that they offer ‘digital’ tuning of analogue wavebands, despite them not offering DAB reception. Secondly, the majority of ‘DAB radios’ presently on sale in the UK offer DAB reception in combination with analogue radio and/or internet radio. When DAB radio receivers were first introduced a decade ago, all the models offered were DAB-only. Nowadays, it is harder to find a DAB-only model in shops. Earlier this year, I surveyed the radio hardware on sale from UK retailers (see chart below) and found that the most common DAB consumer proposition is now an ‘FM + DAB’ radio.

In its latest consumer research on take-up of digital radio, Ofcom said that the result of its survey (see below) “highlights the continued lack of awareness among consumers of ways of accessing digital radio”. Consumers have low awareness of their ability to already access digital radio, and It appears that the words “digital radio”, “digital audio broadcasting” and “DAB” are not yet precisely understood. This uncertainty makes the results of market research about ownership levels of DAB radio hardware somewhat unreliable.

One of the targets set by the Digital Radio Working Group at the end of 2008 for the implementation of digital radio was that DAB radios should reach 50% of radio receiver sales by volume by the end of 2010. However, if the current rate of growth continues, this target is unlikely to be reached until 2016 (see chart below).

Besides, this target is largely irrelevant to digital switchover because it seems to assume that consumers are making a definitive choice between the purchase of a DAB radio or an analogue radio. In fact, as the earlier chart shows, the majority of DAB radios presently offered by retailers also include FM radio. Although the DRDB data states that 22% of radios sold in the UK incorporate DAB, the vast majority of those include FM too. So, for every 100 new radios sold, you are probably adding to the UK’s inventory of receivers between 95 and 98 new FM radios, at the same time as adding 22 new DAB radios. In other words, the household penetration level of analogue radio receivers is barely diminishing at all, a fact that will ensure that FM broadcasting remains as vital to our radio system as it has always been.

In summary, the DAB platform seems to be developing slowly as a supplementary platform to existing analogue radio reception. Far from DAB radios ‘replacing’ analogue radios, the overwhelming majority of new radios purchased in the UK are still analogue-only. The remainder are mostly DAB/analogue combination receivers. In this way, DAB has much in common with ‘Long Wave’ radio, where consumers for a long time were offered a choice of ‘FM+AM’ or FM+AM+Long Wave’ receivers in retail stores. Like Long Wave, for a minority of consumers DAB may be a ‘must have’ when purchasing a new radio, but for the majority it is merely an optional extra whose purchase is likely to be very dependent on the comparative prices of available options.

Conclusion

The publicly available data on the demand for DAB is not particularly encouraging for the platform’s future. Much of the implementation of DAB to date in the UK has focused on ‘supply-side’ issues, without seeming to determine whether there is sufficient demand from consumers for new content, and without determining whether that new content would prove sufficiently attractive to lure consumers into shops to purchase DAB radios. Ironically, it appears that if our existing system of analogue radio broadcasting had been less well developed in terms of both the range of available content and its near universal delivery, DAB might have been better able to address any pent-up demand from consumers. As it is, the majority of consumers seem very content with their existing radio options. Our pursuit of excellence in radio over the last 80 years has created something we can be proud of – but it has also made it hard for it to be bettered by a ‘new’ system such as DAB.

[For more data on the challenges facing digital radio in the UK, check out a presentation I made to the European Broadcasting Union Digital Radio Conference in June 2009]

Funding DAB radio infrastructure upgrade: still 'no'

The Media Show, BBC Radio 4, 2 September 2009 @ 1330

Steve Hewlett interviewed Tim Davie, Director of BBC Audio & Music

We talked at the Radio Festival a few months ago and you talked a lot about DAB. The criteria have been stated now for moving forward to switchover, or before anyone contemplates switching off the analogue FM signal, of 50% of listening and 90%+ of coverage. Do you think that’s realistic by 2015?

I use the word ‘ambitious’ and I mean it. I think it’s tough. It is possible. I think the radio industry to date has shown an incremental path towards digital and, unless you get a big step change, you’ll never get there. And, to be fair, the BBC has driven this harder than anyone.

When we last spoke about it, there was a discussion of £100m or so being needed to pay for the rollout of not the BBC stuff but whatever is necessary for the commercial sector to go digital. At that time, I asked you specifically whether there was any money in your budget identified for that purpose and you said ‘no’. Has anything changed since we last spoke?

It’s another ‘no’. No, nothing has changed and until the plan ….

This is not going to happen, is it?

I think that radio will move to digital, and I think that ….

Will it be DAB?

I think at this point, it will be …. I believe in DAB. I say ‘at this point’ because I think we have hurdles to jump over.

Digital radio: Parliamentary Question

House of Commons: Written Ministerial Statements: 9 September 2009

Digital Broadcasting: Radio

Tim Farron: To ask the Secretary of State for Culture, Media and Sport whether his Department’s proposals for the analogue radio switch-off in 2015 have been submitted for rural proofing to the (a) Commission for Rural Communities and (b) Rural Advocate.

Mr. Simon: The Digital Britain White Paper set out our commitment to a full impact assessment of the Digital Radio Upgrade; including consideration of the rural impact. To inform these assessments we will work closely with the relevant stakeholders, such as the Commission for Rural Communities and the Rural Advocate.

Tim Farron: To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the merits of providing financial assistance to (a) low-income households and (b) households in hilly rural areas in respect of the analogue radio switch-off in 2015.

Mr. Simon: The Digital Britain White Paper set out our commitment to conduct a full impact assessment, including a cost benefit analysis of DigitalRadio Upgrade. The results of this impact assessment will help determine whether there is a case for a Digital Radio Help Scheme, and if so, what its scope would be. In addition, the Consumer Expert Group, which brought together key consumer representatives to inform the Digital TV switchover process, has been invited to extend its scope to cover radio and will ensure that the Digital Radio Upgrade programme takes account of the wide range of listener needs.