Tag: DAB

EU Commissioner Viviane Reding: digital radio in Europe

Interview from the latest issue of Germany’s Meinungsbarometer Digitaler Rundfunk magazine:

EU COMMISSIONER OPPOSES EUROPEAN RADIO LEGISLATION
Equipment manufacturers and broadcasters must promote standardisation

In light of the national debate about digital radio [in Germany], EU Commissioner for Information & Media, Viviane Reding, in an interview with Meinungsbarometer Digital Broadcasting, has called for receiver manufacturers and content providers to implement compatible standards. This would ensure that, in most EU Member States, the family of DAB standards are either already being used or would be introduced. If the trend towards hybrid media devices continues, the EU Commissioner believes there is no need for statutory regulation.

Ms Reding, millions of European motorists make cross-border journeys and are subject to various digital terrestrial radio standards. What is the EU doing to achieve a unified standard for digital terrestrial radio in Europe?

This issue of EU-wide radio standardisation is still in its infancy. The main reason is that radio, from a political, business and consumer standpoint, is organised primarily as a regional or even local product. This is, in principle, rightly so. The reason the radio landscape in Europe is so fascinating is because it is so diverse and highly innovative. Therefore, EU-wide radio legislation is not advocated.

Standardisation, however, is still an issue during the transition to digital radio reception. The market is making considerable progress on this question. Currently, the DAB standard is the most widely used digital terrestrial radio technology in the Member States of the EU. DAB is already used in Belgium, Denmark, Germany, Spain, Luxembourg, the Netherlands, Portugal, Sweden and the UK. Malta is already using the newer DAB+ standard, and its implementation is currently also being considered in Germany. Later this year, France and the Netherlands want to test another new standard, DMB, for digital terrestrial radio broadcasting.

I hope that, in the interest of tourists and cross-border travellers, that device manufacturers and content providers here will soon agree with each other to use a standard or at least open, compatible standards. I therefore welcome the fact that device manufacturers are increasingly coming to market with products, at little additional cost, that can process several standards and codecs. If this positive development continues, a statutory standardisation will certainly not be necessary.

In Germany, there are moves to postpone the 2015 date for the planned closure of FM. How do you see this situation developing in other European countries?

I believe the time is not ripe for a single EU-wide radio FM switchoff, such as we are doing for analogue TV in 2012. I can also well imagine that the 27 EU Member States, given their different levels of development, will want to take their own innovative approaches to digital radio switchover. Therefore, it is important from the perspective of the EU that the Member States take into account in their plans what their neighbours – and beyond – have done and learn from others’ good and less good experiences. The European Commission is strongly promoting these individual views and experiences at a European level.

As for financing the construction of the infrastructure for new digital terrestrial audio broadcasting: can you envisage the Digital Dividend being used?

The digital dividend is defined as the spectrum freed by the shutdown of analogue broadcasting once all programmes are only broadcast digitally. The term “digital dividend” is therefore not a direct means with which one can finance digital radio networks, as it only creates efficiency gains through technical progress. The digital dividend in the medium of terrestrial radio is significantly lower than in terrestrial television where, through appropriate co-ordination at the European level, the potential economic benefits of the digital dividend between 2009 and 2015 will create an additional 20 to 50 billion Euros. With terrestrial radio, however, the digital dividend could be higher, depending on the performance of digital transmission standards that are replacing analogue FM. In my view, this is the strongest incentive for a shift to digital terrestrial radio broadcasting.

DAB radio European update

NORWAY
The newspaper Aftenposten reported that “sales of DAB receivers are still at a snail’s pace”, with only 61,000 sold in Norway in 2008, compared to eight times that number of analogue receivers sold. Culture Minister Trond Giske said that, if his party wins the election this autumn, “we will present a white paper on DAB in 2010 which, amongst other issues, will discuss whether the government can contribute more actively to promote the digital migration of the radio medium. We now have good experience from the digital migration of television, though the radio medium will take longer and require more preparation. Among other things, there are many more radio receivers to be replaced than there were TV sets, so it is extremely important that this transition occurs at a socially acceptable pace.”

The following day, in an article headlined “Poor Sales Of DAB Radios”, Norway’s Kampanje magazine reported that sales of DAB radios are only 40,000 to 60,000 per annum out of a total 700,000 to 800,000 radios sold annually. Cumulatively, over the last decade, 300,000 to 400,000 DAB radios have been sold out of a total 8,000,000 radio receivers. Synnove Bjoke, managing director of electronics trade organisation Elektronikkbransjen, said: “We believe sales will increase in the years ahead. The day we are given a [FM] switch-off date, we will sell many more DAB radios, but we need a date. There has been uncertainty amongst people, and also in our industry, as to whether we’re ever going to switch off the FM band, and that uncertainty makes people buy regular FM radios.”

SWITZERLAND
Speaking at Swiss Radio Day 2009 held in Zurich last week, Swiss Radio German-language station DRS director Walter Ruegg announced the introduction of DAB broadcasts from 15 October and said that the platform would also be made available to local commercial stations in Switzerland. English-language public station World Radio Switzerland will also be broadcast nationally on DAB from the same date.

IRELAND
RTE Radio boss Clare Duigan told the Irish Independent newspaper that the absence of commercial stations on the DAB platform was a “big issue”. She said: “We’ve begun to talk to the Independent Broadcasters of Ireland [IBI] and we’re very much hopeful that over the next couple of months we’ll be able to work something out. DAB is one of those areas where we really need to work together as an industry.” But IBI boss Willie O’Reilly responded that commercial stations are not interested in rejoining the DAB platform “at the moment” because “the return on investment looks poor”. UTV head of Irish radio Ronan McManamy said that DAB is “not a priority” for UTV in the “current marketplace”.

Paying for DAB radio carriage: god only knows

Premier Christian Radio, the London AM station, is planning to broadcast on the national DAB platform from 21 September 2009. In an e-mail to listeners, its chief executive Peter Kerridge explained:

“Beginning in September, we will start to incur the cost to transmit on this digital platform – £650,000 per annum – which is an expense that is over and above our current operating costs. The only way the £650,000 in transmission costs will be covered is through the generosity of friends like you. It is fantastic that God has moved in such an amazing way to provide Premier this national digital licence! Now may you and I be found faithful as we steward this new resource for His glory and for the advancement of His Kingdom!”

DAB carriage remains a costly business. Digital One, the owner of the sole national commercial DAB multiplex, fixes the carriage costs for content providers such as Premier Christian Radio. If £650,000 seems like a lot of money for broadcast on a platform that reaches 33% of adults in the UK and accounts for only 13.1% of radio listening [RAJAR Q1 2009], understand that this is a bargain compared to the expensive contracts some content providers had signed previously. In January 2009, Digital One responded to the government’s Digital Britain initiative by cutting its prices. Acting chief executive Glyn Jones said:

“We’re turning the ideas set out in the Digital Radio Working Group’s report into actions. That includes looking hard at how Digital One can offer lower carriage costs. In turn we’re expecting that stakeholders involved in the Working Group, and other companies with the ambition to launch new national radio stations in 2009, will step up and engage with a view to adding compelling new choice for consumers. We’re expecting that prices will initially be set below Digital One’s 2008 rate card. One reason for that is to help provide an incentive for people to invest in high quality services. But, over time, companies providing new services will be expected to contribute to the costs of a transmitter roll-out plan which was something also identified by the DRWG as important.”

Digital One’s January 2009 press release was ambitiously headlined ‘New National Radio Stations To Launch In 2009’. Seven months later, what stations have stepped forward to take advantage of the Digital One offer? Government-funded BFBS Radio started DAB simulcasting on 20 April 2009, following a three-month trial in 2008. Amazing Radio launched on DAB in June 2009 for a six-month trial period, playing unsigned artists from its music web site. Also in June 2009, Fun Kids, which is normally on DAB only in London, launched a fourteen-week trial simulcast on national DAB. Neither BFBS nor Amazing Radio are participating in RAJAR radio audience research, so it is impossible to know how much listening these services are attracting on the DAB platform.

Have we seen any major media players step forward and put a new mass market radio service on the national DAB platform? Not yet. Why? Because, even at the knockdown rate of £650,000 per annum, it still proves impossible to make a profit from offering radio content on DAB. The table below offers very rough estimates of what digital stations measured in RAJAR (and carried on a mix of broadcast platforms including DAB and digital TV) should and might be earning in revenues. The second column lists the total hours presently listened to each digital station. The third column uses the average commercial radio sector yield (how much revenue was generated from how much radio listening in 2008) to estimate, in theory, what these stations’ revenues should be.


However, the ‘Commercial Radio: The Drive To Digital’ report commissioned from Ingenious Consulting by RadioCentre in January 2009 told us that:

“Incremental revenue from DAB-only stations is negligible at ~£130k per ‘bespoke’ station …”

The list above comprises the 14 digital radio stations that subscribe to RAJAR. Not all of these stations broadcast on DAB (Smash Hits Radio is only on digital TV), not all of them are national (Yorkshire Radio is only on the Yorkshire DAB multiplex, for example), but let us be generous and assume that each station earns revenues of £130,000 per annum. In total, these stations combined would generate £1.82m per annum of revenue. This is substantially less than the £29.7m revenues that would be expected to be generated from them attracting 22.7m hours per week of listening.

The final column in the table estimates how much revenue each station might be earning from the £1.82m total, if revenues were proportionate to hours listened. I must stress again that this only a rough estimate – none of these stations, nor Ofcom, publishes the actual revenues of digital radio stations. What these estimates demonstrate is that, if Planet Rock were (like Premier Christian Radio) paying £650,000 per annum for its carriage on the national DAB multiplex (the financial details of its “long-term” deal with Digital One were not made public), the station is still nowhere near breaking even, not even after ten years on-air.

The Ingenious Consulting report found that DAB-only stations are spending £25m per annum on operating expenses. The above table shows that, if these stations were attracting revenues proportionate to the listening they presently enjoy, collectively they would then be profitable (£29m revenues minus £25m operating expenses). But, in fact, their revenues are presently less than £2m. The Ingenious Consulting report concluded that, as a result, the “annual negative cash flow impact of DAB” on the commercial radio sector is around £27m per annum.

This £27m annual loss attributable to digital radio stations represents around 5% of commercial radio’s revenues, a significant impact on an industry which is only marginally profitable overall at present. The nub of the problem is this: digital radio stations presently account for 5.3% of listening to commercial radio, but digital radio stations attract only 0.3% of commercial radio revenues. Here is a massive economic disconnect that requires much more than a mere increase in productivity or some kind of performance improvement. Doubling or even tripling these stations’ revenues would barely dent the problem.

Maybe DAB is simply not a platform where the traditional commercial radio model can be made to work – the old model of ‘give away free content, pay for it by attracting advertisers to buy on-air spots’. Maybe DAB is not a medium from which traditional UK commercial broadcasters can generate profits from offering content, as they had anticipated in the 1990s. Commercial broadcasters are pushing no commercial product other than their on-air brand (and some music downloads, concert tickets and click-through purchases). Instead, perhaps DAB can only be made to work as a marketing tool to assist companies selling (non-radio) products. So, for example, it would make sense for Universal Music to have a DAB radio station to expose directly to the public the CDs/videos/movies they are currently selling. It would make sense for Amazon to have a DAB radio station to promote all the consumer products it is selling. Then, the £650,000 carriage cost could be considered an additional ‘marketing expense’ for these companies’ core business, rather than a direct operating expense that had to be recouped ON-AIR.

The other possibility is for DAB to be used predominantly by organisations whose objective is something other than breaking even financially. In January 2008, I had written:

“Worryingly, this sudden flowering of ethnic, religious and publicly-funded radio stations on the DAB platform echoes the fate of the ‘AM’ waveband in the 1990s, at a time when the radio industry and the regulator had become convinced that audiences were deserting that platform for the improved audio quality offered by the ‘FM’ waveband. By 2002, declining audiences of ‘AM’ stations had persuaded the regulator to suggest that the platform be used in future “for better serving minority, disadvantaged or currently excluded audience groups, whether defined by their interests, demographics or ethnicity”. The ‘DAB’ platform of 2008, particularly in London, is already starting to resemble the ‘AM’ platform of 1998, suggesting that ‘DAB’ might have already been written off by the sector as a means to reach the ‘mass market’ audiences that national advertisers desire from the medium.”

This trend towards non-commercial content has developed further since then. The national DAB platform has added BFBS Radio (government-funded) and now Premier Christian Radio (religious), but no new permanent digital radio stations operating on a commercial model. Local DAB multiplexes have added Traffic Radio (government-funded), Colourful Radio (ethnic) and UCB (religious). Interestingly, UCB has taken two channels on each of the regional MXR DAB multiplexes, giving it a substantial amount of DAB spectrum. But there have also been ethnic DAB radio casualties since my earlier report – Islam Radio in Bradford closed its DAB service in December 2008, and India’s Zee Radio closed its London DAB service in April 2009. Even for ethnic broadcasters locked out of analogue radio, DAB can prove a struggle.

Premier Christian Radio’s Peter Kerridge hit the DAB nail on the head when Media Week reported:

“Kerridge said Premier Media’s funding meant it was in a better position than other media organisations, as the ‘ad-funded model is smashed’ …..”

The available financial data confirms that, certainly for the DAB platform, an ad-funded model simply is not viable at present. To make DAB work for your content, you need government funding, direct listener financial support, a sugar daddy, or some kind of god smiling benevolently down upon you.

Digital Britain: the Implementation Plan

The government has published the Implementation Plan for Digital Britain, setting out its action plans for the proposals made in June 2009’s Final Report. These are the sections that directly concern the radio sector:

PROJECT 1: DIGITAL ECONOMY BILL
LEAD: Colin Perry

GOVERNANCE
– Bill Project Board oversees the delivery of the Bill. Members are David Hendon (BIS)/Jon Zeff (DCMS) – joint SROs, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Colin Perry (Bill Team Leader), Laura Williams (secretariat)
– Bill Management Group tracks progress and drives delivery of the Bill. Members are Colin Perry (Bill Team Leader) chair, Deputy Directors BIS/DCMS, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Laura Williams (secretariat). Other policy leads attend as appropriate.

ACTIONS COVERED FROM THE FINAL REPORT [exceprts]:
􀂃 Amending the Communications Act 2003 to make the promotion of investment in communications infrastructure and content one of Ofcom’s principal duties.

􀂃 Ensure the Board of Ofcom has a statutory obligation to write to the Government alerting Secretaries of State to any matters of high concern regarding developments affecting the communications infrastructure and in any event to write every two years giving an assessment of the UK’s communications infrastructure.

􀂃 Encouraging, where appropriate, adjoining radio multiplexes to merge and extending existing multiplexes into currently un-served areas rather than awarding new licences. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 We will make an amendment to the existing legislation to support a change in the localness regulatory regime to allow location in mini regions defined by Ofcom.

􀂃 Grant a further renewal for up to seven years of analogue radio licences for broadcasters which are also providing a service on Digital Audio Broadcasting (DAB).

􀂃 Grant Ofcom new powers to insert a two year termination clause into all radio licences awarded or further renewed before the Digital Radio Upgrade date.

PROJECT 6: DIGITAL RADIO UPGRADE
LEAD: John Mottram

ACTIONS COVERED FROM FINAL REPORT [in full]:
􀂃 Develop Action Plan for Digital Radio Upgrade, including a Cost/Benefit Analysis.

􀂃 Invite Consumer Expert Group to extend its current scope to inform the development of the Digital Radio Upgrade.

􀂃 Facilitate the roll-out of the BBC’s national multiplex to ensure it achieves coverage comparable to FM by the end of 2014.

􀂃 Encourage, where appropriate, adjoining local multiplexes to merge and extend coverage into currently un-served areas. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 Allow for the extension of multiplex operators’ licences until 2030, if part of an agreed plan towards Digital Radio Upgrade.

􀂃 Consider with Ofcom the case for delaying the implementation of AIP on DAB multiplexes until after the Digital Radio Upgrade is completed.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years, although this decision will be kept under review. In addition, amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.

􀂃 Grant Ofcom new powers to insert a two year termination clause into all licences awarded or further renewed before the Digital Radio Upgrade date.

􀂃 Work with broadcasters and vehicle manufacturers to implement the ‘Digital Radio in vehicles: a five point programme’.

􀂃 Agree with Ofcom a two-year pilot of a new output regulatory regime.

􀂃 Reduction in number of locally-produced hours in exchange for enhanced commitment to local news.

􀂃 Ofcom to consult on a new map of mini-regions which balances the potential economic benefits but also the needs and expectations of listeners. We will make an amendment to the existing legislation to support this change.

􀂃 Consultation seeking views on proposals for a new licence renewal regime for community radio. This consultation will include proposals to remove the 50% funding limit from anyone source and the restriction preventing a station being licensed in an area overlapping with a small commercial service and extending our commitment to promoting best practice within the community sector and encouraging self-sustainability by allocating a small portion of the Community Radio Fund to support the work of the industry body, the Community Media Association.

􀂃 Insert two year termination clause into all new licences.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years (keep this decision under review). If by the end of 2013 it is clear the Digital Radio Upgrade timetable will not be achieved we will use the powers, set out above, to terminate licences and the existing licensing regimes will apply.

􀂃 Amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.

Digital radio switchover: 'you can't move faster than the British public want you to move'

Feedback, BBC Radio 4, 31 July 2009 @ 1330

Sir Michael Lyons, chairman of the BBC Trust, interviewed by Roger Bolton and listeners:

[Do you think the principle of moving across to DAB is a good one?]

The BBC has been a strong supporter of digital radio, believing that it will actually offer an improved service, and …

[Improved in what way? The quality of the existing services will be made better? Or it allows you to provide a range of other services as well?]

I think both. But, of course, you only satisfy the first of those two tests when you’ve actually got the same sort of coverage [on DAB] that you’ve got on FM. And indeed, it’s important to say that the BBC has already picked up what commercial radio was going to do in terms of more investment to get to 90% of the population, and that will be achieved by 2011. But I think we’re going to go on to the question of ‘[FM] switch-off’ because actually that’s a different issue altogether ….

[Well, one of the key things of public service is universal access and, clearly, a lot of people are saying [that] until 2015 there won’t be one because, unlike a television set, perhaps we’ve got five or six radios around the house and a different radio in the car. And are you telling us we are going to have to buy five or six new radios and a new radio for the car in order to listen to something we might not want in the first place? That’s the argument.]

Well, let me underline that I’m not saying that. That’s actually in the government’s Green Paper – they propose a date of 2015. The Trust is very clear actually. Who comes first in this? Audiences and the people you 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. So there’s no doubt that 2015 looks challenging.

[Chairman, are you prepared to say, on behalf of the listeners, to the government, whichever government is in power, if they are insistent in pushing this through and you believe that listeners will be significantly disadvantaged, are you prepared to say ‘no, the BBC can’t go along with this’?]

Well, as things stand at the moment, [in] the Digital Britain report, it seems that the BBC will find the money for this final stage, so there are serious discussions to be had about how it’s going to be funded, as well as whether actually 2015 is in any way a realistic timescale. Now, what I can say now, is that those have already formed part of our discussion with Ministers and will continue to form part of our discussions with Ministers.

[But, to repeat my question, are you prepared to say at some point, or countenance saying, to a Minister ‘no, we can’t go along with this because, in doing so, we will provide a disservice to our listeners’?]

Well, I think I’ve said as much I need to say today …..

[…. as a diplomatic chairman …..]

…. and also, you know, it’s very important that I don’t try and conduct any discussion I’m having with Ministers over the air.

Digital radio: a European update

This month’s decision by Germany not to invest further public funds in developing the DAB radio platform has inevitably caused reverberations around Europe during the last fortnight. In an article headlined “There will always be FM”, Geneva-based Follow The Media notes that Germany is “Europe’s richest ad market for radio”, ensuring that what happened there would inevitably influence other territories.

In Austria, it is understood that the private and public stakeholders in DAB held an emergency meeting on 17 July to discuss the fall-out from the German decision. Nothing has yet been announced publicly.

In Spain, the Association of Spanish Commercial Radio (AERC) held a General Assembly this week which, amongst other things, considered the progress of DAB in Spain. AERC general secretary Alfonso Ruiz de Assin concluded: “The DAB system is obsolete in Spain and we have conveyed to the authorities that it is a road to nowhere”. He added that “traditional and digital [radio] will co-exist for a long time”.

In France, the timetable for implementation of its T-DMB digital radio system still looks challenging. The average French household has six radios and it is estimated that the replacement cycle for these will be ten years. From 1 September 2010, radios with display screens will incorporate a digital tuner. From 1 September 2012, all media players, mobile phones and GPS hardware will include digital radio. From 2013, all new cars will be sold with digital radios. Although digital TV switchover in France is happening in autumn 2011, there has been no date set yet for digital radio switchover. Radio station owners have applied to the government for a €16.5m grant to contribute to the costs of simulcasting on T-DMB over the next eight years (estimated at €30k per annum per station per market). The headline of a recent French article asked “Is digital radio success guaranteed?” and commented that “given the financial constraints required by this new method of distribution, the answer is not so obvious”. It noted that “FM radio will not disappear in the near future and that radio via the internet is increasingly popular”.

Also in France, the National Union of Free Radios has expressed concern that the T-DMB standard (like DAB) will require small stations to broadcast over a large coverage area as part of a cluster of broadcasters from each multiplex. It notes that such an arrangement will prove too expensive for small stations which are seeking an opportunity to go digital at low cost. The Union is advocating the DRM+ standard be used in France alongside T-DMB, and conducted a test broadcast in Paris this week. As one article noted, “DRM+ has the advantage of being more flexible – it is an opportunity for radio to be broadcast independently outside the big [T-DMB] multiplexes”.

Meanwhile, back in Germany, the Financial Times ran a story today headlined “Digital radio fails in Germany”. Asked about the prospects there for DAB radio, Hans-Dieter Hillmoth, deputy head of the German private broadcasters association (VPRT) said bluntly: “Currently there is no viable business model”. The article noted that, after ten years of DAB in Germany, only 600,000 DAB radios have been sold. In neighbouring Switzerland, it is anticipated that 300,000 DAB radios will have been sold by year-end. DAB radio receiver manufacturers, including the UK’s Pure, had expected to sell 300 million units in Germany. Asked what importance it attached to the German DAB market, global audio manufacturer Pioneer commented “absolutely none”, and it added that the death of traditional analogue radio receivers is “absolutely not in sight”.

Digital Radio Switchover: Parliamentary Question

20 July 2009 : Column 561
House of Commons
Monday 20 July 2009
The House met at half-past Two o’clock
Prayers
[Mr. Speaker in the Chair]
Oral Answers to Questions
Culture, Media and Sport
The Secretary of State was asked—
Digital Radio Switchover

1. Sir Nicholas Winterton (Macclesfield) (Con): What his most recent assessment is of progress on digital radio switchover; and if he will make a statement. [287437]

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Siôn Simon): The “Digital Britain” White Paper set out the Government’s vision for the delivery of the digital radio upgrade by the end of 2015. We have committed to a review of the progress towards that timetable in spring 2010, and we have also asked Ofcom to review and publish progress against the upgrade criteria at least once a year, starting next year.

Sir Nicholas Winterton: Is the Minister not aware that “Digital Britain” has in fact failed to address the inadequacies of digital radio broadcasting coverage? I am sure that he will agree with that comment. Representations made to me so far suggest that the idea of a switchover is currently very unpopular. Instead of rushing ahead with the switchover, will he take positive action to allow people to see some tangible benefits?

Mr. Simon: I am disappointed that the hon. Gentleman thinks that we are rushing ahead. We have said that we will move Britain to digital by 2015. That gives consumers and the industry six years to make the upgrade, which we are doing because we are committed to radio, we believe in radio and we love radio, and radio will not have a future unless it goes digital. We are not switching off FM, and we are putting new services on the FM spectrum that is vacated by the services which move to digital audio broadcasting, because we want to see radio prosper and grow in the digital age.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Is my hon. Friend aware that switchover is affecting valued services on both radio and television? I have been lobbied by Teachers TV, which fears that it will lose an enormous part of its audience because the Department for Children, Schools and Families is stipulating that it must switch over totally to digital.

Mr. Simon: We are ensuring with radio switchover that community organisations and small community radio stations, which might currently be able to broadcast for only two weeks a year, will inherit the FM spectrum currently taken up by big regional and national FM broadcasters. Precisely such small, commercial, local community organisations will be able to flourish in the digital future in a way that they are technologically constrained from doing now.

Adam Price (Carmarthen, East and Dinefwr) (PC): The Minister is a Welsh speaker, so is he aware of the fears for the future of Radio Cymru, the BBC’s Welsh language national service? It is not currently available on digital and will not be available in large swathes of western Wales for reasons of topography.

Mr. Simon: I have, with personal regret, to tell the hon. Gentleman that I am not really a Welsh speaker. [Hon. Members: “Ah!”] Dwi’n dysgu, ’de? I should have been a Welsh speaker. We are alive to the particular problems of Wales. There are serious problems with coverage, not just with respect to Radio Cymru but with digital coverage throughout Wales. We have made it clear that the nations and regions that are furthest behind in digital coverage will be the first priority for the most serious intervention, to ensure that they are not left behind when we move to digital. We have made it clear also that we will not move to digital unless 90 per cent. coverage at the very least is achieved.

Mr. Jeremy Hunt (South-West Surrey) (Con): I start by welcoming you to your post, Mr. Speaker—an elevation that was only marginally more likely than man walking on the moon, which happened 40 years ago today. I offer you my congratulations. I am sure that you will want to join me in offering the congratulations of the whole House to the England cricket team, which won an historic victory today—their first victory over the Australians at Lord’s for 75 years. We would also like to congratulate the Minister on taking up his post in the DCMS team. The Government’s own figures state that there are 65 million analogue radios in circulation, and they hope that the cost of digital radios will fall to £20 a set. That means that the cost of upgrading the nation’s analogue radio stock will surpass £1 billion. Who will pay that £1 billion? Will it be the Government, or will it be consumers?

Mr. Simon: Mr. Speaker, I should apologise for having forgotten to congratulate you; I thought that we were taking your position for granted by now, but it is my first time speaking under your chairmanship. I offer my very sincere congratulations. I never thought that your elevation was unlikely.

Mr. Edward Vaizey (Wantage) (Con): What about cricket?

Mr. Simon: The hon. Gentleman shouts “cricket” from a sedentary position. I can tell him that the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), was at the cricket, which almost certainly accounts for the first English victory at Lord’s since, I believe, 1934. In response to what we might call the “Tory sums” of the hon. Member for South-West Surrey (Mr. Hunt)— [Interruption.] No, Tory sums. We do not know how many analogue radios are in circulation; it may be 65 million. The first point to make is that those sets will not become redundant. The FM spectrum will be well used for new services that are currently squeezed out. We are working with industry to come up with sets that are consistently priced at £20 or less. That will enable consumers to add to the 9 million digital sets—

Mr. Speaker: Order. May I gently say to the hon. Gentleman, who has been extremely generous in his remarks, that I do not want to have to press the switch-off button, but I am a bit alarmed that he has a second point in mind? It might be better if he kept it for the long winter evenings.

Mr. Hunt: The point is that if people use their analogue sets, they will be able to listen to new radio stations, but not the radio stations that they have been listening to for a very long time. Was it not the height of irresponsibility to announce the phasing out of analogue spectrum without announcing any details or any funding for a help scheme, similar to the one that was in place for TV switchover? Will that not cause widespread concern among millions of radio listeners, who will feel that they are faced with the unenviable choice of either paying up or switching off?

Mr. Simon: I shall try to squeeze in my answer at the end of that extraordinarily long question. We will do exactly the same with radio as we did with television: we will carry out a full cost-benefit analysis of exactly what kind of help scheme might or might not be required, and we will proceed accordingly. There are 9 million digital sets in use already. Consumers have six years to decide how much they want to pay, for what equipment, to receive which services.

http://www.publications.parliament.uk/pa/cm200809/cmhansrd/cm090720/debtext/90720-0001.htm

DAB radio in Germany: further public funding rejected

The organisation that funds public radio in Germany has rejected a request for €30m from state broadcasters to develop DAB broadcasting between 2009 and 2012, and has rejected an additional request for €12m to fund digital switchover. Following its meeting on 15 July, KEF announced that the funds for DAB development “will not be released because substantial elements of the criteria agreed previously with broadcasters had not been met and the viability of the projects could not be demonstrated.” According to Follow The Media, which broke the story online today, more than €200m of public money has already been spent developing DAB broadcasting in Germany.

In April 2008, twelve criteria had been agreed between KEF and the broadcasters that would need to be met for funds to be released for digital radio projects:
· Concrete agreements from public and private broadcasters to launch digital radio services, with a rollout plan
· Statements regarding the content of these digital radio services and their value to listeners as a nationwide offering, compared to existing FM stations
· Plans for added value services, such as Visual Radio, TPEG traffic data and podcasts
· Evidence of the extent of DAB usage, both in Germany and abroad
· Statements from manufacturers regarding their DAB radio receivers, delivery dates and retail prices
· Statements on the future of FM broadcasting
· Statements on the marketing strategy and necessary budgets for DAB
· Plans for the development of DAB broadcast infrastructure in metropolitan areas and their service quality
· Total costs of the proposed projects
· Implementation time of the proposed projects
· Milestones to be met in the implementation of the project, with KEF auditing their achievement
· Compliance with the KEF checklist and responses to additional KEF questions

At its meeting last week, KEF decided that “the criteria had still largely not been met”. A forecast of the total cost of implementing DAB in Germany was not offered to KEF, although transmission costs for the period 2009 to 2020 were estimated by state radio to be €163.6m. However, KEF was told that FM radio broadcasts could not be ended until digital platforms accounted for 90% of radio listening, which was anticipated by 2020. The public radio companies expected to make a further application to KEF for funds of approximately €300m to complete the switchover from FM to DAB beyond 2012.

The earlier decision by Germany’s private radio sector not to invest further funds in DAB development weighed heavily on the KEF decision, as it concluded that FM switch-off would be “unthinkable” without the participation of commercial radio in the DAB platform. KEF also made it clear that the financial savings anticipated from the ending of FM/DAB dual transmission were a pre-requisite for further investment in DAB, as was “a minimum diversity of programme offerings significantly above those currently offered on FM”.

Follow The Media reported: “There must be no more time wasted with this project now,” said media spokesperson Thomas Jarzombek of the CDU party in North Rhine-Westphalia to Wolbeck-Münster (July 17). “Instead, all the resources are now directed to the internet. …. After the exit of private radio stations and the rejection by the KEF, digital radio on DAB+ died.”

Digital Radio Upgrade: everyone's a winner?

For every winner, there is inevitably a loser (or three). The ‘Digital Radio Upgrade’ proposals contained in the Digital Britain Final Report are no exception. It is relatively easy to see who the winners will be from its proposals, as some of these are made explicit in the accompanying Impact Assessment:
• “the beneficiaries of these proposals are primarily [DAB] multiplex operators” (p.12)
• “benefits of £38.9m per annum [to broadcasters] for each year after dual transmission on analogue and DAB ceases” (p.12)
• “cost savings to [commercial radio] national broadcasters of licence extensions approximately £10m” (p.12)
• “cost savings [to local commercial radio stations] of co-location and increased networking £23m” (p.12)

However, the losers are made far less explicit in the fine print of the Impact Assessment:
• “merging [DAB] multiplexes will reduce the overall capacity available for DAB services, therefore reducing the potential for new services” (p.117)
• “reduced capacity on local multiplexes might result in some services losing their current carriage on DAB” (p.117)
• “extending the licence period of existing analogue services would reduce the opportunities for new entrants” (p.119)

There would appear to be a degree of contradiction here. Digital Britain also insisted that:
• “DAB should deliver new niche services, such as a dedicated jazz station …. The radio industry has already begun to agree a pan-industry approach to new digital content …” (p.98 main report)

However, the Impact Assessment admits that amalgamation of existing local DAB multiplexes will reduce their capacity, “therefore reducing the potential for new services”. Worse, it states that some existing stations broadcasting on DAB will have to be bumped off as a result of local multiplex amalgamation.

So the potential losers from Digital Radio Upgrade would seem to be:
• commercial stations presently carried on local DAB multiplexes who might have to be bumped because there is no longer the capacity after amalgamation
• local commercial stations presently carried on their local DAB multiplex who will have to quit DAB because they do not wish to serve the enlarged geographical area after amalgamation of multiplexes (for example, the cost of DAB carriage for Kent/Sussex/Surrey is likely to be considerably higher than Kent alone)
• new entrants

The local commercial radio stations bumped from DAB will fall into two types:
• digital-only stations (such as Yorkshire Radio) whose current regional multiplex will be transformed into a national (or quasi-national) multiplex under Digital Britain proposals – such stations have no analogue broadcast licence and could lose their radio broadcast platform altogether
• analogue local stations who were simulcasting on DAB, but whose multiplex has either bumped them post-amalgamation, or who are not in the market to pay more for increased coverage across a much larger area – many of these stations have had their Ofcom analogue licences renewed on condition that they simulcast on DAB. If they are now forced off DAB, will Ofcom take their licences away?

In the rush to frame proposals in Digital Britain that respond to the circumstances of the large radio players with substantial investments in DAB infrastructure, it might appear that the voices of the smaller local commercial radio stations have got lost in the stampede of lobbying. These stations might be small in number but many of them remain standalone, so they will not benefit financially from the relaxation of co-location rules. Digital Britain is condemning many of them to remain on FM (or AM), leaving the large radio groups to dominate the DAB platform.

Although the proposals in Digital Britain have been framed to ‘help’ local commercial radio, overwhelmingly they will reduce the financial burden of group radio owners with local station operations in adjacent areas, and of group owners who have invested in DAB infrastructure. There is little in the way of financial benefits for independent local commercial stations, or for potential new entrants, both of whom face being crowded out of the DAB platform.

Paying for Digital Britain's 'Digital Radio Upgrade': who, me?

The Digital Britain Final Report published in June 2009 proposed that the UK radio industry embark on a ‘Digital Radio Upgrade’ which would seem to involve (take a deep breath):

· Providing greater choice and functionality for listeners (para.15)
· Listeners who can currently access radio can still do so after Upgrade (para.15)
· Building a DAB infrastructure which meets the needs of broadcasters, multiplex owners and listeners (para.21)
· Redrawing the regional DAB multiplex map (para.21)
· The BBC beginning “an aggressive rollout” of its national DAB multiplex to ensure its coverage achieves that of existing FM by 2014 (para.23)
· Commercial radio to extend the coverage of its national DAB multiplex and to improve indoor reception (para.21)
· Investment to ensure that local DAB multiplexes compare with existing FM coverage (para.24)
· The extension and improvement of local DAB coverage (para.25)
· Measures to address the existing failings of the existing DAB multiplex framework (para.26)
· The merger of adjoining local DAB multiplexes and the extension of existing multiplexes into currently unserved areas (para.26)
· The existing regional multiplexes to consolidate and extend to form a second national commercial radio multiplex (para.26)
· Convincing listeners that DAB offers significant benefits over analogue radio (para.28)
· DAB to deliver “new niche [radio] services” and to gain better value from existing content (para.29)
· DAB to offer more services other than new stations (para.30)
· DAB to offer greater functionality and interactivity (para.31)
· Implementation of digitally delivered in-car traffic and travel information (para.31)
· DAB radio receivers to be priced at below £20 within two years (para.32)
· Introduction of add-on hardware (similar to Freeview boxes) to enable consumers to upgrade their analogue receivers (para.32)
· Energy consumption of DAB radio receivers to be reduced (para.33)
· New cars to be sold with digital radios by 2013 (p.99 box)
· A common logo to identify and label DAB radios (p.99 box)
· Development of portable digital radio converters (p.99 box)
· Integration of DAB radio into other vehicle devices such as ‘SatNav’ (p.99 box)
· Work with European partners to develop a common approach to digital radio (p.99 box)

A lengthy list. And who is going to pay for all this? Digital Britain stated that “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies” (para.44). This means the BBC and the commercial radio sector. And what exactly do these radio broadcasters think about having to pay for all these proposals without the aid of specific government funding? A seminar organised by the Westminster Media Forum this morning gave us an opportunity to find out. Here’s what was said about the Digital Radio Upgrade issue (speech excerpts):

Caroline Thomson, Chief Operating Officer, BBC [‘CT’]:
“The [Digital Britain] report is clear that there is an ambitious target for analogue switch-off in 2015. It is an ambitious target. Radio switch-off is a very different issue from television switchover, but we are supportive of this ambition and we will work with partners in the industry towards delivering it. And we have already made a lot of progress working with commercial radio to develop the policies on this. But, at the heart of it, we must remember that we must put listeners first and be careful not to damage the ability of listeners to tune in to the content they love. Working with commercial radio to secure the digital future in a way that will work for all our listeners is a crucial part of this. As my colleague Tim Davie, Director of [BBC] Audio & Music, said recently: ‘unless we huddle together for scale, we are going to be in trouble’. The BBC is drawing up our digital rollout plans in radio to see where and when it is possible to extend DAB coverage, and how much it would cost. We are willing partners, and DAB is a good example of an area of the Digital Britain report where we are helping to meet the charge.”

Andrew Harrison, Chief Executive, RadioCentre [‘AH’]:
“The real choice, which Digital Britain identifies, is which broadcast platform do we want – FM or DAB. And here, the genie is out of the bottle. DAB now exists on 10m sets, the BBC will not withdraw 6Music and BBC7 or the Asian Network or Five Live Extra – it never withdraws services – and commercial services will not fold DAB-only stations like Planet Rock or Jazz FM. Digital Britain has been clear in its aspiration – national, regional and larger local stations will have a clear pathway to upgrade to DAB and switch off FM. Smaller players will have a clear opportunity to remain on FM without an obligation to move across to DAB. Strategically, that’s a simple resolution – both will co-exist. So, next we need a plan to work out how we might achieve the migration criteria – on transmitter coverage, set sales and in-car penetration. The devil inevitably will be in the detail. But we need two strong interventions from government – on coverage and on cars – before any migration plan will be taken seriously. On cars, Digital Britain falls short of mandating manufacturers, unlike in France, to put digital radio in all cars from 2013. Encouragingly, Ford and Vauxhall have both confirmed their intent to upgrade in line with the timeline for 2013, but we need government to force the pace. On coverage, Lord Carter has ducked the funding issue. The commercial sector has already built out its national and local multiplexes as far as is commercially viable. So I’m delighted to hear Caroline emphasise that the BBC is supportive of the direction and ambition for digital radio and are willing partners helping to fund the change. It’s now time for the BBC and government to stop their wider dance around the BBC’s future role and theoretical possible future uses of the Licence Fee which have never been paid for before, and [to] instead consider how to broker a coverage plan for digital radio that will make it happen.”

Carolyn McCall, Chief Executive, Guardian Media Group [‘CM’]:
“It’s hard to escape the feeling that what the Digital Britain report has done is just gone: ‘we recognise the issue, big issue DAB’. They said something like that, which is pretty important, but they have just gone: ‘Ofcom, deal with it’. That’s how it strikes me. It just seems that so much of this on radio is being left to Ofcom to deal with. And if what I read is true, David Cameron doesn’t want an Ofcom anyway. So that is quite a serious issue for us as an industry. The most worrying aspect of the report in relation to radio is the assertion that investment needed to achieve the Digital Radio Upgrade will be made by existing radio companies. Effectively, the promise of deregulation is being made conditional on commercial radio funding digital [upgrade], stumping up more money that the commercial industry simply cannot afford. We’ve always had too much regulation for a small industry struggling in an unregulated digital world. While we back DAB, I don’t think any commercial broadcaster is going to feel comfortable about paying for those developments. The final point on radio is that, at a time when that industry in particular needed some clarity, the report does not give us any clarity. What new powers will Ofcom have, what role will they be expected to play, what is the position on the vital issue of Format change, what is meant by greater flexibility in relation to co-location, and mini-regions? The list goes on. I would say to Stephen [Carter], or Ben [Bradshaw], or indeed Jeremy Hunt, we need urgent clarifications on these issues and quickly.”

Q&A session [excerpts]:

[Is analogue radio switch-off going to include the [BBC] Radio 4 Long Wave signal?]

CT: That is the government policy. The policy is to switch off all analogue radios.

[Existing DAB coverage is not good enough?]

AH: Right now, self-evidently, DAB coverage is not good enough for anyone to consider switchover. There is a bill to be paid to deliver that public policy imperative. As long as that bill is met and covered, I think the BBC and the commercial sector would confidently switch over knowing the coverage is better ….

[Unless you start spending money now, and if you are, where is it going to come from, it’s not going to happen, is it?]

CT: First of all, we will not do the analogue switch-off unless it is the case that there are very big thresholds that have already been passed, particularly about car radios. And the challenges of getting to those thresholds by 2013, which is what we’ve said, are enormous, even if we build out the transmission. So let me just be clear. It is not the BBC’s policy to switch off FM or Long Wave until we are secure and clear – that is why I made the reference to listeners in my speech – that that is the policy which will work for listeners. On the money, for now we don’t have the money to build out beyond 90% – that is our current build-out – and the final 10% costs much more per percentage than the previous 90%, but we will look forward to a discussion with the government about it. We would like to be able to do it because, in the long term, as for commercial radio, running dual illumination [FM/DAB simulcasting] costs a lot of money so a switchover in 2020 costs us more than a switchover in 2015. But we won’t do the switchover in 2015 unless we believe particularly that car radios are up …..


CM: This point about digital radio [switchover]. There are no funds. I am not really convinced […noise…] and margins are slim because everyone has been hit by the recession quite badly. I don’t know where the money is going to come from for digital switchover of radio.

AH: I remain confident that where we are now with Digital Britain from the radio perspective is into the negotiation now – who pays for this? Frankly that is a negotiation that is far more likely to be concluded positively in the next few months between the BBC and a Labour government than under a Conservative government, so I remain optimistic that both sides will be brought to the table. In terms of who pays and who can afford this, the reality is that the BBC Licence Fee is £3.5bn, that’s seven times the total income of commercial radio. The cost of DAB coverage build-out is about £5m a year – that’s less than Jonathon Ross’ salary or Michael Lyons’ pension fund – so it’s purely a question of priorities for the BBC. I would have thought that it is quite within the limit of the BBC’s talented management to come up with a solution that can meet the public purposes set out for DAB and still deliver all the wonderful content that we enjoy.