Tag: Digital Radio Development Bureau

UK DAB radio receiver sales fell in 2009 and 2010, but "digital radio sales have held up – they are flat" insists Mr Switchover

For an organisation that has been charged with marketing DAB radio to the British public, Digital Radio UK has managed to remain remarkably invisible during 2011. This alone made the appearance of Digital Radio UK’s chief executive on BBC Radio 4’s ‘You & Yours’ show notable. The fact that nothing new was said was hardly surprising – there is nothing new to say about DAB.

Out in the real world, as opposed to the imaginary world inhabited by Digital Radio UK, the notion that ‘DAB radio’ will replace AM/FM radio is already a dead duck. The only believers still worshipping ‘DAB’ seem to be Digital Radio UK, RadioCentre, Ofcom and government civil servants.

The evidence is transparent. The number of DAB radio receivers sold in the UK fell year-on-year in both 2009 and 2010 (by 6% and 2% respectively). These data are collected by GfK and supplied to Digital Radio UK. These numbers, together with a nice colour graph, were distributed at last month’s RadioCentre members’ get-together. These are industry data of which Digital Radio UK is perfectly aware.

Yet, Digital Radio UK’s chief executive insisted in this interview on national radio that “digital radio sales have actually held up – they are flat year-on-year.” This is untrue. ‘Down’ is not ‘flat.’ ‘Down’ is ‘down.’ DAB radio receiver sales peaked in 2008 and have been falling since. DAB receiver sales in 2010 were 8% below that 2008 peak. That is clearly not ‘flat.’

I wonder how it is that:
• The chief executive of a high-profile marketing organisation can appear on Radio 4 (audience: 11m adults per week) and flatly state something that he must know not to be true?
• The board of Digital Radio UK does not haul him in and remind him that his job description is to ‘persuade’ consumers of the value of DAB, not deceive them?
• A substantial proportion of this organisation’s funding is derived from the BBC Licence Fee, so the public is effectively paying for an executive to tell them untruths about consumer take-up of DAB radio?

You & Yours
BBC Radio 4
29 July 2011 @ 1200

Ford Ennals, chief executive, Digital Radio UK [FE]
Wiiliam Rogers, chief executive, UKRD [WR]

Q: Are you not disappointed with the lack of a rise in [DAB] radio sales?

FE: No, I think what the Ofcom report confirms is the solid progress that is being made. We see growth in overall digital listening, we see growth in terms of the number of homes that have a digital radio receiver in there. So, 40% of all homes now have a DAB receiver in them, we know that 47% of all listeners are listening to digital radio every week, and we have seen growth in digital listening. So I think progress is being made. I think we are in a difficult sales period for overall retailers and we have seen a decline in overall consumer electronics sales. Digital radio sales have actually held up – they are flat year-on-year. We have now sold 13 million DAB digital radios, but the key thing, just lastly, to remember is that you can receive digital radio via digital television, via a computer or, indeed, via a smartphone and many, many households and consumers have those.

Q: William Rogers, are you surprised by the lack of increase in interest in digital radio?

WR: No, not in the least. And I think we have to remember that Ford, with respect to him, is being a little disingenuous because, of course, the switchover is about people being forced to move way from analogue and onto DAB. So that’s the issue we need to focus on. And what this report highlights, and I’m personally delighted to see it, is it really does shine a light on the shambles that is this proposed DAB migration.

Q: But things aren’t that bad. There are increases in radio usage, as Ford has just indicated.

WR: Well, hang on a minute. The whole premise behind the switchover is that it will be, quote, consumer led. And the one thing we know from these statistics is that, whatever else it is, it’s not being consumer led. As your reporter quite rightly said earlier, of the eight-and-half million radio devices sold in the twelve-month period we are talking about, four out of five of them did not have a DAB receiver capacity. And, more interestingly, of those people who were asked whether they were likely to buy a DAB set at any time in the next twelve months, four out of five of them said they were not likely to. So the consumer is making it very clear what they want and, after eleven years, it’s time this thing was put to bed.

Q: Ford Ennals, one of the things that we constantly hear from listeners is the whole issue of reception. That’s really what, I think, the message is that we get from people. That is what they are worried about. Whether they approve or not [of DAB], what they say is an awful lot of people can’t get them [DAB radio signals] and, if they can get them, they can’t get them consistently.

FE: Well, I think, where the industry and the broadcasters are absolutely unified and agreed is that digital is the future of radio in the UK. And I think it’s just a matter of the timetable and the transition path for that. One of the big issues is, as you have said, is about coverage and about the ability of everyone to get a strong [DAB] signal. Now, what Ofcom have done is developed a plan to extend coverage, both of the local services and the national services, so that people can receive those services and get more confidence. But there is a direct parallel here with TV and digital television – I ran the TV switchover programme – and, back in 2006, the majority of TV sales were analogue and only 75% of the population could get digital television. Now, what happened over the next few years is we saw a very swift transition and we saw transmitters built out that so everyone could get digital TV. We’ll see the same on radio.

Q: What about that, William? We don’t jump ‘til we have to. We don’t buy ‘til we have to.

WR: Look, look. Let’s be clear about this. Ford Ennals is paid to market the DAB switchover, so I understand why he has to say what he has to say, because the message from this report is clearly embarrassing for him to make a case which clearly doesn’t exist. There are a number of points we have to remember. First of all, the comparison with TV switchover is plainly an absurd point to make. They are not remotely, in any way shape or form, similar. And people are choosing not to endorse DAB as an alternative [to FM/AM]. The critical thing we have to understand here is three elements. First of all, ….

Q: You’ll have to confine yourself to one because we are really tight for time.

WR: Okay, the fundamental problem with this whole process is that you cannot migrate an entire sector if the [DAB] platform you have chosen does not have the capacity to allow you to do so. And there are scores of radio stations in this country who will be denied the opportunity to move to a DAB platform, because the choice was wrong in the first place.

Q: A ten-second response.

FE: Just finally. People love digital radio. We’ve seen it with [BBC] 6 Music and we saw the campaign to save 6 Music. We’ve seen it with the response to Radio 4 Extra. And they’ll continue to enjoy it in the future.

Q: I’m sure our postbag and our e-mails will be as big as usual. William Rogers and Ford Ennals, thank you both very much indeed.

……………………………..
Point of information:
Ford Ennals was chief executive of Digital UK, the TV switchover marketing organisation, from April 2005. He announced his departure in November 2007, the same month that the first UK region entirely switched off analogue television broadcasts.

DAB radio take-up in the UK: the 2010 year-end scorecard

“I think that there is great potential for digital radio, as the UK and Danish experiences demonstrate.”
Neelie Kroes, vice president for the digital agenda, European Commission, 3 March 2011

“This milestone is part of building momentum for the transition to digital radio in the UK …”
Digital Radio UK, December 2010

“I think that there has been a transformation in the last twelve months.”
Ford Ennals, chief executive, Digital Radio UK, February 2011

“2010 was a fantastic year for the DAB family, with much encouraging news and positive activity from individual markets …”
Jørn Jensen, president, World DMB, March 2011

“We are seeing increased momentum and activity as digital radio switchover moves from debate to reality …”
Bernie O’Neil, project director, World DMB, March 2011

“2010 had a real sense of forward momentum and activity …”
Caroline Brindle, project office manager, World DMB, March 2011

“Building momentum”? “Transformation”? “Fantastic year”? “Increased momentum”? “Forward momentum”?

Is this DAB radio that we are talking about? In the UK, at year-end 2010, the picture looked like this:

DAB radio receiver penetration:
· 2010 year-end forecast: 53.4% (Digital Radio Development Bureau, 2007)
· 2010 year-end actual: 35.8%

Cumulative DAB radio receiver sales:
· 2010 year-end forecast: 24.5 million (Digital Radio Development Bureau, 2006)
· 2010 year-end actual: 12.5 million

DAB radio receiver sales as % total receiver sales:
· Q1 2011 forecast: 50% (Digital Radio Working Group, 2009)
· Q1 2010 actual: 21%

Radio listening via digital platforms:
2010 year-end forecast: 50% (Ofcom, 2006)
2010 year-end actual: 25%

Radio listening via digital platforms:
2015 year-end forecast: 50% (Digital Radio Working Group, 2009)
2010 year-end actual: 25%

Radio listening via digital platforms:
2010 year-end forecast: 31% (Digital Britain: drive to digital, 2009)
2010 year-end actual: 25%

Commercial radio listening via digital platforms:
2010 year-end forecast: 40% (RadioCentre, 2007)
2010 year-end actual: 24%

None of the stakeholder forecasts of DAB take-up in the UK have come to pass. In this respect, 2010 was no better a year than any other.

Neelie Kroes is mistaken. Evidence from the UK experience certainly does not demonstrate the “great potential” for DAB radio.

DAB radio receiver sales in 2010: what was the actual number?

On 21 December 2010, a press release from Digital Radio UK announced that “12 million digital radios have been sold in total in the UK” and estimated that:
· “due to strong Christmas sales, over 2m digital radios will be sold during 2010
· A cumulative total of 20 million digital radios will be sold by the end of 2013.”

It takes a brave person to predict in mid-December what a year-end sales figure will be. More so with DAB radio receivers because, in previous years, the month of December alone has accounted for more than a quarter of annual sales.

It takes an even braver person to predict that, by year-end 2013, an additional 8m digital radios will have been sold. Whether or not 2m units were actually sold in 2010, we do know that just under 2m units had been sold in 2009, and just over 2m units in 2008 and in 2007. So please can Digital Radio UK explain what revolutionary change will ensure that sales suddenly spurt during 2011, 2012 and 2013? Buy one, get one free?


Perhaps this new ‘20m by 2013’ figure was forecast by the same party that produced earlier forecasts for the Digital Radio Development Bureau, the forerunner to Digital Radio UK. As the graph above demonstrates, none of those forecasts made in 2004, 2005, 2006 and 2007 were rooted in an analysis of reality. If they were, then 24.5m digital radios would have been sold by now. Whereas, the actual figure is 12m, less than half the forecast for 2010 the industry had made four years ago.

It is interesting to note that all the recent sales figures offered by DAB lobbyists refer to ‘digital radios’ rather than ‘DAB radios.’ One wonders exactly how many internet radio receivers have been sold in the UK and are being used to prop up the illusion that DAB radio is some kind of success story with consumers. When I have asked for a breakout of internet radio sales, data were not supplied.

If, as the Digital Radio UK press release shouts, a “digital radio landmark” was really achieved in December 2010, then why are the recorded UK monthly and quarterly sales figures for DAB radios not available from the Digital Radio UK web site for the public to admire? (Maybe because the Digital Radio UK web site is completely empty.)

The chief executive of Digital Radio UK was quoted last week saying: “There is now real momentum in the transition to digital radio.”

“Real momentum” is not what the sales data for DAB receivers, even those few estimated figures released by Digital Radio UK, demonstrate to be the reality.

The DAB radio scrappage scheme – much too little, much too late

The BBC started DAB radio transmissions in the UK twenty years ago and then, ten years later, DAB was implemented commercially. During all that time, DAB radio has failed to ignite the interest of most British consumers. Neither has this European technology been successfully exported to all corners of the globe, as had been anticipated. Countries where DAB is working commercially can be counted on one hand. The end result – warehouses full of unsold DAB radios, billions of pounds of investment unlikely to ever show a return, apathetic consumers and potentially disgruntled venture capitalists.

The one-month DAB ‘scrappage’ scheme announced this week smacks of desperation. In 2009, fewer DAB radio receivers were sold than in 2007. Consumers have voted with their wallets and remain unconvinced. This downward sales trend started before the credit crunch but no action has been taken to stop it. The window of opportunity for DAB radio mass market take-up would seem to have come and gone.

During the first decade of DAB, a scrappage scheme would have been unthinkable. All parties involved in launching DAB were too busy rubbing their hands at the very anticipation of the profits that would be coming their way. High-priced DAB receivers, monopoly control of DAB airwaves and cheap, DJ-free jukebox digital radio stations. You could almost see the pound signs in the eyes of DAB stakeholders.

How times have changed. The DAB radio industry is now a salvage operation. It is a passé technology and the current objective is simply to shift as many of those brick-shaped DAB radios out of storage warehouses as possible, almost at any price. The present period before DAB is finally pronounced DOA is time limited. After that, DAB radios will become the Tamagotchi of the broadcast sector.

The most damning part of all this is the boldness with which the radio industry is still prepared to foist a technology on the public that, in many listening situations, is so technically inadequate. Instead of fixing the problems with DAB reception (which would cost a fortune), the industry just persists in maintaining its stance that DAB radio is fine. But trying to dupe your customers (particularly when radio is the most ‘trusted’ medium, according to Ofcom) must be counterproductive. Crime doesn’t pay if your business model requires loyal listeners.

Just as damning is the industry’s refusal to accept that it is ‘content’ that drives radio listening. Why would anyone buy a relatively expensive DAB radio when it offers so little content over and above what can already be accessed via AM/FM, digital TV, mobile phones and the internet? Commercial radio’s closure of most of its digital stations, followed this year by BBC proposals to axe two of its digital stations, hardly inspire consumer confidence in DAB.

Complicit in this is the radio industry’s willingness to endorse DAB radio set manufacturers’ increasingly desperate measures to shift their products. Pure, the biggest UK brand of DAB radio receivers, is circulating a booklet for consumers to pick up in-store that purportedly “dispels digital radio switchover myths”. Rather than itemise all of the booklet’s assertions that are either untrue (“AM services will either move to FM or to digital only”) or which distort the truth (“Digital radio … crystal-clear, interference-free listening”), I suggest you read it yourself here.

On the one hand, it will make you laugh with incredulity. On the other hand, if you love the radio medium, it will make you cry. Sorry, but when exactly was it that snake oil salesmen took over this industry?

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

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

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

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

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

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

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

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

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

More specifically:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marketing DAB radio: misleading listeners only damages the medium

The radio medium’s loyalty amongst consumers derives substantially from the trust engendered between the on-air presenter and the listener. Research has demonstrated that radio is trusted more than any other medium, and that its audience feels a much greater affinity than it does with less intimate media such as television and newspapers.

In view of the importance of this ‘trust’ between radio and its audience, it seems a remarkable own-goal for radio to be promoting itself in a misleading way in advertisements carried on its own medium – radio. If listeners cannot trust radio people to be truthful about radio on the radio, then does it not undermine the bond that exists between a radio station and its listenership?

A recent radio advertisement placed on commercial radio stations by the Digital Radio Development Bureau, the agency tasked with persuading the public to buy and use DAB radios, stated:

“This is an advert for DAB digital radio. If you were listening to me on a conventional analogue …” [the sound of radio interference interrupted the speaker momentarily. The voice-over then continued:] “… radio you might very well hear strange noises …” [further sounds of radio interference followed. The voice-over continued:] “… which would ruin your enjoyment of your favourite programme …” [more interference sounds were audible. The voice-over continued:] “… meaning you might miss out on the crucial …” [radio interference sounds could be heard once more] “… but, with a DAB radio, you can enjoy crisp, clear digital sound. To find out more and discover loads more stations, visit getdigitalradio.com. Prices start from £24.99. Digital radio, get more from your radio”.

Listeners complained to the Advertising Standards Authority [ASA] that this advertisement was misleading because, when the DAB radio signal is inadequate, the audible broadcast signal is interrupted.

The Digital Radio Development Bureau responded that:
• because DAB is a digital technology which is either ‘on’ or ‘off’, the signal is always the same right up to the coverage limit
• DAB uses single-frequency networks technology where the same programme is transmitted from a number of sites, and DAB receivers add the signals from all the transmitters together, reducing gaps whereas, in an analogue radio network, gaps between transmitters cause the signal to fade in and out as the listener moves around
• a digital radio receiver is not subject to the background hiss and interference that might be audible with an analogue radio, and it is only when the listener is not in a digital station’s coverage area that the signal drops out
• electrical interference from fridges, thermostats, motors or light switches can cause crackle on analogue radio, whereas digital radio is not susceptible to this
• the other interference referred to in the advert is intrusion of pirate radio broadcasters that listeners might hear on analogue radio. Because there is no low-grade, cheap equipment available for DAB, pirates are not able to broadcast on digital radio
• the advert sought to promote the fact that DAB radio was hiss- and crackle-free, which the Bureau believed was reasonable and responsible.

The ASA believed otherwise. It said it understood that “if listening to digital radio whilst travelling, the digital signal could drop out when entering a built-up area or walking between tall buildings,” whereas the adverts “gave the misleading impression that listeners would never experience any interruption to a DAB signal, when that was not the case.” The ASA banned future use of the advert.

This was not the first occasion on which advertisements promoting DAB radio have been found to be misleading. In 2005, the ASA had similarly banned a radio advert which had stated:

“If you’re someone who thinks an iPod is something you might keep your contact lenses in you probably haven’t heard about DAB digital radio. With a new digital radio costing from as little as 49.99, not only can you hear all your current favourites in crystal clear sound, you can switch on to a dial-full of digital-only stations specialising in everything from classic rock to books that talk. The future is here today with distortion free DAB digital radio: taking the hiss out of the way you listen to the radio. Message provided by TWG Emap Digital.”

On this occasion, the ASA decided that “not all DAB digital radio listeners would receive ‘distortion free’ and ‘crystal clear’ sound and concluded that the claims were misleading,” it having “received no evidence to show that DAB digital radio was superior to analogue radio in terms of audio quality.”

On another occasion, in 2004, Ofcom banned an advertisement broadcast on London station Jazz FM which had claimed falsely that DAB radio offers consumers “CD-quality sound”. Ofcom concluded that “some listeners, in particular listening circumstances, would perceive a difference in sound quality between services using lower bit rates or broadcasting in mono compared to the quality attainable on CDs.”

There is a recurring theme here of DAB radio marketing campaigns repeatedly being found to be misleading listeners. Their response: just try and try and try again. Perhaps there should be a ‘three strikes, then you’re out’ policy. Do not pass go. Do not advertise DAB radio misleadingly on the radio. Do not continue to abuse the trust between the radio medium and its listenership.

DAB radio receiver sales: never let facts get in the way of a big number

A newsletter arrived in my in-box today from Digital Radio UK, the new organisation charged with making DAB radio a success. It told me some startling news:

“By the end of 2009, when buying a radio, more than three quarters of people chose a digital one.”

And, just in case I did not believe this fact, immediately beneath, it told me the same thing again:

“New sales figures reveal that, when buying a radio, more than 75% of people choose a digital one.”

I did not believe it. All the previous data from the radio industry had shown that DAB radios are around 22% of total radio sales, as demonstrated in the graph below.

A year ago, the government’s Digital Radio Working Group had set an ‘aspirational’ target for DAB radios to be 50% of total radios sold by the beginning of 2011. As this graph clearly shows, the odds of successfully coming anywhere close to that target are zero.

Maybe something revolutionary had happened in the consumer market for the proportion of DAB radios sold to have suddenly surged from 22% in Q1 of 2009 to 75% by year-end. It was extremely puzzling.

Then I read an extraordinary letter that Ford Ennals, chief executive of Digital Radio UK, had written to the House of Lords Select Committee on Communications on 15 February 2010. It said in part:

“I thought […] that it might be useful if I wrote with the very latest radio sales data. Encouragingly, it shows that, during 2009, consumers increasingly chose digital sets over analogue ones.

I thought it clearest to present the data in a simple table, which is attached, but it may be useful if I explain a couple of the terms used. Where the data refers to ‘kitchen radios’ it means the kind of sets that you and I would call ‘a radio’ i.e. a set whose sole function is to listen to the radio.

Where it refers to ‘all radios’, these figures include those pieces of electrical equipment which happen to have a radio chip in them (e.g. a hi-fi where the main reason for purchase may be to listen to CDs or an MP3 player where listening to downloaded music is the primary function).

As you can see, by Christmas 2009, 76% of people buying ‘a radio’ chose a digital one…… [emphasis added]”

Aha! Now I think I understand. The only way in which it is possible to contrive that more than three quarters of radios sold are digital radios is to arbitrarily create a completely new definition of ‘radio’. In this brave new world, only a ‘kitchen radio’ will now be called a ‘radio’. (The truth is: 76% of people who purchased a kitchen radio during December 2009 bought a digital radio, though the proportion for the whole of 2009 was 63%.) Every other type of radio is no longer defined as a radio. This new definition of ‘radio’ would completely exclude:
     • Micro systems
     • Clock radios
     • Tuner separates
     • Handhelds
     • Boomboxes
     • In-car radios
     • Audiovisual systems
     • Home cinemas
     • Docking stations
     • Dect phones [?]
     • Mobile phones
     • LCD TVs
     • Record players

This seems like a long list of products which, if they also happen to include a radio, will no longer be defined as having a ‘radio’. How can a ‘clock radio’ not be a radio? How can a ‘tuner’ not be a radio? I know this long list to be a comprehensive definition of ‘radio’ because it was the very definition of ‘radio’ used by the Digital Radio Development Bureau, the forerunner to Digital Radio UK, in its published data. Of course, that was last year. In 2010, ‘radio’ seems now to have a whole new definition.

What can I say? However desperate you might be to try and make DAB radio a success, how is it justifiable to deliberately mis-state data so outrageously in print? And to Parliament?

Costs/benefits of digital radio switchover: why the government buried the evidence

Digital radio switchover was first mooted in the 1980s and started to gather momentum following the first UK public demonstration of the DAB digital transmission system at the Radio Festival in Birmingham in 1991. New Scientist magazine reported then that DAB radio could be up and running in the UK “by the mid-1990s”. However, it was not until 1999 that DAB radio was launched publicly and DAB radio receivers were made available commercially.

Over this period of decades, it would have been sensible to commission some kind of cost-benefit analysis to assess if there were a potential net benefit to radio listeners, to the radio industry, and to the UK generally of embarking on a plan to convert the whole nation to digital terrestrial radio. If such an analysis was ever published, I must have missed it.

We are now in 2010, an incredible 29 years after research and development first started on DAB radio technology. The issue of digital radio switchover has been the subject of a succession of government initiatives since the end of 2007 (the Digital Radio Working Group, Digital Britain, the Digital Economy Bill). Has the government shared with the public a cost-benefit analysis which demonstrates that the public policy on digital radio pursued over the last 20+ years is somehow worthwhile? No. Does such a cost-benefit analysis exist? Yes. Can we see it? No. Where is it? Apparently, gathering dust on a government or Ofcom shelf.

How do we know this? A parliamentary committee recently delved into these facts during its current investigation into the issues surrounding digital switchover in the television and radio markets (see transcript below). Ofcom has remained remarkably silent on the issue of digital radio switchover in recent years. The regulator’s director of radio, Peter Davies, was last seen speaking publicly about DAB in November 2008 when he admitted that new legislation would be necessary to salvage the DAB platform. A little earlier, in April 2007, Davies had prematurely declared that “we are potentially at a Freeview moment with digital radio.” Three years later, radio’s ‘Freeview moment’ seems as far over the horizon as ever.

The first we knew that the government had commissioned some kind of cost/benefit analysis [CBA] for its proposed digital radio switchover was in November 2009 when the Digital Economy Bill was published. The government’s accompanying Impact Assessment document stated:

“The partial Cost Benefit Analysis conducted by Price Waterhouse Cooper (PWC) for the Digital Radio Working Group, which is available on the DCMS website, suggests the Digital Radio Upgrade could reduce the total transmission costs for the radio industry from £87.9 million to £64 million….”

“First, by supporting greater investment in DAB infrastructure a greater number of consumers will have access to DAB and the quality of reception will improve. Secondly, consumers will benefit from access to a wider range of services, specifically new national stations and functionality, such as pausing and rewinding live radio. Finally, the released analogue spectrum will allow for a greater range of community radio stations, as well as possible non-radio services. The PWC partial CBA for the Digital Radio Working Group suggests the value of these benefits could be in the region of £1.1 billion, over a period from 2009 to 2030…..”

“The significant consumer costs of the Digital Radio Upgrade in the non-voluntary conversion of analogue sets to digital, including the cost of in-car conversion. The PWC report suggested the cost of such conversion to be in the region of £800 million, again over the period from 2009 to 2003.” [typo – “2003” should be “2030”]

Although this document stated that the PWC report was available from the government’s web site, I have searched for three months and still never found it there. Nevertheless, the 91-page report entitled ‘Cost Benefit Analysis of Digital Radio Migration’, prepared for Ofcom by PWC on 6 February 2009, contains a number of very serious reservations that there will be ANY benefit from digital radio switchover, and it states:

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

The PWC report explicitly noted for Ofcom the limitations of its analysis, as a result of the lack of consideration it had assigned to external factors. These paragraphs probably explain why the government has been so keen to keep the report away from public scrutiny:

“The scope of this study is limited to the assessment of the DRWG policy. The overall digital radio policy appraisal process would need to take into account other policy options and ‘states of the world’. With this in mind, we highlight three issues in particular:

1.    The impact of recession: We have assumed no change in commercial radio sector structure and health beyond a consensus view of advertising forecasts. As this CBA is conducted for the time period to 2030, short term recessionary impacts may have only a limited impact on the longer term outcome for the industry. On the other hand, the current economic downturn could still affect the short and medium term investments required for marketing or coverage extension, which in turn could delay the desired DRWG policy outcome.

2.    Other policy options: We recognise that to reach a view on this question of how to drive digital radio penetration and listening (which in turn delivers consumers’ and citizens’ objectives) requires a full assessment of the costs and benefits of a number of policy options; this study has examined one, the DRWG policy. This is the only policy assessed in this study and the policy is at an early stage of its development; Government and Ofcom could give consideration to other possible policy options. In addition, we recommend modelling a number of other ‘business-as-usual’ scenarios taking into account different assumptions, and assessing how they affect the CBA of the DRWG policy.

3.    Other digital platforms: This CBA assumes that DAB listening will continue to be the leading platform for digital radio listening. The DRWG has reinforced the view that ‘a radio-specific broadcast platform is an essential part of radio’s future’, and that DAB is the ‘most effective and financially viable way of delivering digital radio’ for the medium to long term. A long term view needs to account for the possibility of technology obsolescence or replacement. At present, there is no consensus view that suggests otherwise. However, there are signs that internet listening may begin to take off if internet radios are more actively promoted and technologies such as WiFi or mobile broadband mature and become universally available. A number of the cost and benefit categories assume an impact from increasing the coverage of DAB (for example, consumer benefits from increased coverage is assumed based upon the incremental benefits to consumers who could not receive digital radio stations). Should these trends continue, or a more structural shift to internet to occur, there would be a smaller benefit from increasing the coverage of DAB; consumers either have alternative access to digital radio even within out-of-coverage areas, or would prefer a non-DAB solution when they receive DAB coverage.” [emphasis added]

In the 12 months since the PWC report was prepared, all three of these assumptions have been undermined by subsequent events:

1.    The health and structure of the commercial radio industry have changed considerably during 2009:
•  Commercial radio’s financial health has been impacted severely by the recession. The sector’s revenues were down 19.5%, 10.8% and 12.5% year-on-year in the first three quarters of 2009. Revenues from national advertisers were down 28.8%, 16.1% and 16.5% respectively
•  In January 2009, an analysis commissioned by RadioCentre found that “the [commercial radio] industry as a whole is now loss making”. Hours listened, revenues and profitability have all fallen further since then
•  At the beginning of 2009, Global Radio was the biggest owner of DAB multiplex infrastructure. Since then, it has disposed of its entire stake in the national DAB multiplex and most of its stakes in local DAB multiplexes to transmission provider Arqiva, demonstrating the radio sector’s inability to generate profits from the DAB platform after 10 years

2.    The policy recommendations for digital radio switchover made by the Digital Radio Working Group have since been amended by the Digital Britain report and the Digital Economy Bill. The recommendations of the Working Group’s Final Report published in December 2008 had included:
•  “Government should agree a set of criteria and timetable for migration to digital”, whereas no criteria or timetable are specified in the Bill
•  “A long term plan should be developed to move all services to digital”, whereas the Bill acknowledges that some local radio stations will never have the opportunity to migrate to digital
•  “The BBC should build out its national [DAB] multiplex across the UK to reach FM comparable levels [of coverage]”, whereas the BBC has acknowledged that such expenditure is constrained by the Licence Fee settlement
•  “The government should consider funding options to enable this important investment [in DAB infrastructure]”, whereas the government has made no financial commitment to the build-out of DAB multiplexes
•  “The government must consider the case for a [import] duty exemption for digital radios”, a proposal that is not mentioned in the Bill
•  “Consumer groups believe that, once an announcement [of digital switchover] is made, no equipment should be sold that does not deliver both DAB and FM”, a proposal that has been dropped

3.    The DAB platform has failed to grow in 2009, as had been forecast by the government, Ofcom and the Digital Radio Development Bureau [DRDB]:
•  Volume sales of DAB radio receivers were down 10%, down 1% and down 6% year-on-year in the three most recent quarters for which data have been released by the DRDB
•  Listening to radio via digital platforms accounted for 20.9% of total radio listening at year-end 2009, compared to the 26% forecast by the government’s Digital Britain report in June 2009 (and compared to the 42% forecast by Ofcom in November 2006)
•  Listening to commercial radio via digital platforms accounted for 19.7% of commercial radio listening at year-end 2009, compared to the target 30% announced by RadioCentre in January 2007
•  Total hours listened to digital-only radio stations at year-end 2009 were at their lowest level since 2007, demonstrating that digital radio content is failing to drive consumer take-up of digital radio
•  Unused capacity on the DAB platform has increasingly been filled during 2009 by non-commercial, government-funded, listener-funded, religious or ethnic radio services, rather than by mainstream, mass appeal stations
•  The commercial radio sector launched no completely new broadcast digital radio stations in 2009 (Absolute Xtreme was replaced by Absolute 80s), and the BBC is expected to announce cuts to its digital radio stations at the end of this month

As a result of these developments during 2009, the minimal, long term benefits from digital radio switchover identified by the PWC report a year ago are likely to have been diminished to the point where there may no longer be any benefit evident at all, even as far into the future as 2030. So how can the government still justify pursuing its policy of digital radio migration? It cannot, which is why it remains so reluctant to engage in an analysis of the facts, the numbers, the data and the evidence, all of which clearly show that this misguided, poorly executed, top-down attempt to switch radio broadcasting in the UK to the DAB platform is likely to become a ‘white elephant’ that has already cost the radio industry getting on for £1 billion.

House of Lords
The Select Committee on Communications
“Digital Switchover Of Television And Radio In The UK”
27 January 2010 [excerpts]

Witnesses:
Mr Stewart Purvis, Partner for Content and Standards, Ofcom
Mr Peter Davies, Director of Radio Policy & Broadcast Licensing, Ofcom
Mr Greg Bensberg, Senior Adviser, Digital Switchover, Ofcom.

Baroness McIntosh of Hudnall: I feel we could get back on to slightly safer territory and the notion of cost and benefit. We understand that you commissioned a report from PWC last year into the costs and benefits of digital switchover in radio, but you didn’t publish it. We know, therefore, what we have learned from the DCMS about what it said. It appears that it found, for example, that the benefits could – and I emphasise the word “could” – outweigh the costs by £437 million after 2026, but that conclusion is hedged about with quite a lot of caveats to do with what would have to happen in order for that good outcome to eventuate, and that if those things didn’t happen, then quite quickly you would get into a position where the costs would outweigh the benefits. Can you tell us a bit about that report? In particular, can you tell us why you haven’t published it? Do you think that, given what it appears to say – I choose my words carefully – about the constraints on potential for benefit, that it should have been available to inform the Government’s digital policy? Can you also tell us about your own impact assessment on radio digital migration, which I believe you have been asked to undertake? Will this include a full cost-benefit analysis? When are you intending to publish it? ….. [edited]

Mr Purvis: There are a lot of questions there. Peter commissioned the piece, so I am going to ask him to talk to them, but let me say that you have talked about informing the Government’s decision and one of the main points of doing this was to help inform the Government’s decision. It was a government decision as to whether this information should be published or not. But, we felt, as part of the ….

Lord Gordon of Strathblane: Sorry, it was your document, though, wasn’t it?

Mr Purvis: No, it was actually a PWC document.

Lord Gordon of Strathblane: It was commissioned by you.

Mr Purvis: Commissioned by us, yes.

Lord Gordon of Strathblane: Surely, it would be your decision to publish.

Mr Davies: We were asked to commission it by the Government. We then commissioned it from PWC with a lot of input from various government departments and then submitted it to the Secretary of State.

Chairman: So you decided not to publish it.

Baroness McIntosh of Hudnall: Who owns it?

Mr Purvis: Whenever you commission a document from an outside source, in a sense the ownership of the detail must lie with the people who actually did the work, but, in a sense, when you commission it, obviously you commission it with a purpose and the purpose was to give it to the Government.

Baroness McIntosh of Hudnall: With respect, that is not necessarily true.

Mr Purvis: No, there are options.

Baroness McIntosh of Hudnall: I have work commissioned from me and it may be, and often is, on the understanding that the ownership of what I produce falls to the person who commissioned it from me.

Mr Purvis: Yes, that’s true, but in terms of the ownership. But in the sense of the responsibility for the detail of the commission, the source of the commission must inevitably take its full share of that. But there are a number of options which apply when these pieces of work are done. On this particular occasion, it was decided in conjunction with the Department that work would be sent to the Department. Perhaps the most important thing is for Peter to respond to your characterisation of the work, but, in a sense, we have not hidden the piece of work. Indeed, I think it is now available to you. Is that right?

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

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

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

Mr Davies: Not specifically from PWC.

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

Mr Davies: Yes.

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

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

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

Mr Davies: I think they have made available the redacted version rather than the full report. The reason for that is some of the numbers in there are commercially sensitive, but there is no reason why the Committee should not have the full report.

Mr Purvis: You certainly have seen the conclusions.

Baroness Howe of Idlicote: I just wonder who has paid for it. Has it come out of your budget?

Mr Davies: Yes.

Baroness Howe of Idlicote: Even more indication of ownership.

Baroness McIntosh of Hudnall: Shall we go back to the questions. We now know why you didn’t publish it. Am I right in thinking that, notwithstanding the fact that you did not publish it, it did influence the Government or is in the process of influencing the Government as far as their policy on digital migration goes?

Mr Davies: I think it is one of the inputs to government thinking, certainly. We were very careful when we sent it to the Secretary of State to make clear what all the caveats were. You are absolutely right, there are a lot of caveats around it. This is a piece of work which is at a very early stage of the process. We were very clear to government that they should not use this as the means of making a decision, but it might help to inform the decision.

Baroness McIntosh of Hudnall: The thing that is slightly troubling – perhaps only to me, but a bit – is that when you see what appears to be evidence that the costs and benefits are, let’s say, finely balanced, or could be, that the drive towards digital migration, one might think, was driven more by the technology than by the needs either of the broadcasters or the consumers. That’s the question that seems to me still to hang in the air. Is this technology-led or is it consumer-led, if we wrap into ‘consumers’ both the people who are the end-users and the people who are using the technology to deliver a service?

Mr Davies: I think that is why there are so many caveats around it, because it needs to be, as you say, consumer-led. So, some of the conditions that would need to be met for the figure to come out positive are that coverage needs to be built out, that the content proposition needs to be right, that a lot of the benefit in there is from additional choice for consumers. That is obviously down to industry to provide. That is not something that either government or Ofcom can do. One of the main caveats was the need to roll out the regional layer [of DAB multiplexes] that we were talking about earlier, to become a new national layer, so providing more choice of mass market stations, if you like. So it is absolutely consumer-driven, but where that leads you, I think it is probably too early to say, and, as you say, it is very finely balanced.

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

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

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

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

Baroness McIntosh of Hudnall: So that’s a future thing.

Criteria and a date for digital radio switchover: where'd they go?

When will the UK government’s proposed ‘digital radio switchover’ happen? For a long time, we had always been told that the pre-requisites were:
• market criteria that had to be reached before switchover could be announced;
• a fixed, single date for switchover to happen.

So both of these must be in the Digital Economy Bill somewhere, surely? Well, it seems that everything (except the Bill itself) points to 2015 as the switchover date. But as for the criteria?

The government’s press release of 20 November 2009 announcing the Digital Economy Bill stated:
• “Digital radio: update the regulatory framework to prepare for moves to digital switchover for radio by 2015”.

The government’s accompanying Factsheet of 20 November 2009 stated:
• “At the centre of our ambition is the delivery of a Digital Radio Upgrade programme by the end of 2015.”

The government’s accompanying Impact Assessments of 20 November 2009 referred to:
• “a switchover to digital radio by 2015”
• “a switchover to digital only radio by 2015”
• “a Digital Radio Upgrade programme, which should be completed by the end of 2015”.

However, the government’s Explanatory Notes to the Digital Economy Bill said:
• nothing about criteria that have to be met;
• nothing explicitly about a switchover date.

Published on 20 November 2009, the Digital Economy Bill itself contained nothing about:
• criteria that have to be met;
• an explicit date for digital radio switchover.

What? Is this not strange? Somewhere along the way, it seems as if the agreed criteria and the switchover date just vanished into thin air. So what happened? Let’s go back and follow the timeline of how we got to where we are now.

JUNE 2008
The Interim Report of the government’s Digital Radio Working Group recommended:
• “Government should agree a set of criteria and timetable for the migration to digital.
• These criteria should include an assessment of:
      * The percentage of listening to DAB enabled devices;
      * Current and planned coverage of DAB and FM; and
• In considering the case for migration we expect the Government will also want to consider the take-up of digital radio in cars, affordability, functionality, and an environmental impact plan.”

DECEMBER 2008
The Final Report of the Digital Radio Working Group recommended:
• “Three broad criteria that must be met in order to trigger the digital migration process:
     * That at least 50% of total radio listening is to digital platforms;
     * That national multiplex coverage will be comparable to FM coverage by time of digital migration;
     * That local multiplexes will cover at least 90% of the population and, where practical, all major roads ….”
• “Government should announce a date for digital migration, ideally two years after the criteria have been met”.

JANUARY 2009
The Interim Report of the government’s Digital Britain recommended:
• “We will create a plan for digital migration of radio, which the Government intends to put in place once the following criteria have been met:
     * When 50% of radio listening is digital;
     * When national DAB coverage is comparable to FM coverage, and local DAB reaches 90% of population and all major roads.”

JUNE 2009
The Final Report of Digital Britain recommended:
• “The delivery of a Digital Radio Upgrade programme by 2015”
• “Included within the Digital Radio Upgrade timetable is our intention that the criteria should be met by the end of 2013”:
     * “When 50% of listening is to digital; and
     * When national DAB coverage is comparable to FM coverage, and local DAB reaches 90% of the population and all major roads”

This Report also included a critically important graph (see below) which, it said, “shows the projected digital share of listening under two scenarios: organic growth and with a concerted drive to digital”.

Shockingly, the historical data in this graph had been ‘doctored’ to make it look as if the faster growth path advocated by Digital Britain was easily achievable [confusingly, the key on this graph labels the lines round the wrong way]. When I queried the source of this false data, the government told me it had been supplied by another party, which I later found to be a report produced by the Digital Radio Development Bureau, but not made public.

Digital Britain’s graph sought to demonstrate that continuation of the current growth trend in digital listening would lead to the 50% criterion being achieved in early 2015, whereas the actual data (from RAJAR) in my graph shows the 50% criterion not being reached until the end of 2018 [the trend line here is automatically generated by Microsoft Excel from all available quarterly data].

Digital Britain proposed policies to accelerate DAB take-up which, it said, would ensure that the 50% criterion would be achieved by year-end 2013, a gain of a little over one year from its natural trend. However, in my graph that uses RAJAR data, the acceleration necessary is shown to be five years, not one year, which would prove an almost impossible task to achieve [I wrote about the false data in June 2009].

JUNE TO DECEMBER 2009
Between the publication of the Digital Britain final report in June 2009 and today, it has slowly dawned on some of radio’s stakeholders that the agreed criteria necessary for digital radio switchover stand zero chance of being achieved by 2013. Neither do they stand a chance of being achieved by 2014 or 2015, nor probably by 2016. It always was pie in the sky, wishful thinking, fiction rather than fact. The manipulation of key data in a significant government report only demonstrates the duplicity.

So, what to do about it now? Admit you were wrong? Admit your culpability? Best to simply pretend that the criteria and the proposed switchover date never really mattered. Botched data – ignore it. Unrealistic targets – lose them. Perhaps nobody will notice the whole, sorry deception.

In the here and now, Digital Radio UK (the new organisation responsible for implementing DAB) explains the current thinking:
• “The [Digital Economy] Bill does not set a definite date for digital radio switchover …”
• “The Government has stated that switchover will not happen until the majority of radio listening is to digital, and until anyone who can currently receive FM is able to receive digital radio” [but fails to address why these criteria are not included in the Bill].

In the here and now, RadioCentre (the commercial radio trade body) explains:
• “[Digital Economy Bill Clause 30] allows the Secretary of State to set a [digital switchover] date, but does not require one to be set, or indicate when the date might be”.
• “The objective that switchover should not occur until certain thresholds have been reached for listening … appears sensible on first reading. However, RadioCentre does not believe it is appropriate for the industry to be tied to any figures in primary legislation. This is a very inflexible mechanism against which to manage our industry going forwards”.

Figures. Numbers. Dates. Criteria. This kind of factual evidence or hard data might obstruct a future decision to force consumers to switch to DAB radio.

So to answer the original question – the criteria and the switchover date that had been agreed upon by stakeholders, over two years of deliberations, have now quietly been relegated to oblivion.

When would digital radio switchover have happened if the agreed criteria had been implemented in law? Probably never.

When will digital radio switchover happen now? Whenever those in power want it to.

DAB radio UK sales: 10m in 10 years is “an incredible achievement”?

The Digital Radio Development Bureau [DRDB] published a press release yesterday trumpeting the “incredible achievement” that 10 million DAB receivers had been sold to date in the UK which, it said, “proves that digital radio is here to stay”. The press release was notable not for what it said, but for what it omitted.

Ten million radios sounds like a big number until you realise that this has been achieved over more than a decade of DAB product sales in the UK. There are 51.3 million adults (aged 15+) in the UK. So, averaged over the decade, roughly one out of every fifty adults bought a DAB radio each year. Not so impressive.

Revisit the DRDB’s own forecasts for DAB receiver sales. In 2004, it forecast 13.15m DAB radios would be sold by year-end 2008 (the reality was 8.53m). In 2005, it forecast 19.96m to be sold by year-end 2009. In 2006, it forecast 17.2m sold by year-end 2009. In 2007, it was too embarrassed to revise its year-end 2009 forecast (but even its year-end 2008 forecast of 9.16m was overstated, as the reality was 8.53m). In 2008 and 2009, understandably, the DRDB did not publish its forecasts. The DRDB forecasts of the very consumer market in which it is specialising have consistently been shown to be wildly inaccurate.

The DRDB press release also claimed that “for the past three years, sales of digital radio sets have remained solid”. ‘Solid’ is an interesting choice of word to describe the present situation of declining sales. Sales in Q2 2009 were the lowest in two years and were down 6% year-on-year. Sales in the previous two quarters, Q1 2009 and Q4 2008, were also down 1% and 10% respectively year-on-year. Three consecutive quarters of negative sales growth can hardly be described as ‘solid’.

As the graph above shows, the rot set in at the end of 2005, when year-on-year DAB radio sales growth fell from triple to double digit figures. Both 2006 and 2007 included quarters of single digit growth. Now, in 2009, growth has been negative all the way. This is no temporary blip caused by the recession. The writing was already on the wall by 2006 – the DAB party is over. Now we are merely waiting for the last few guests to leave.

The other remarkable statement in the DRDB press release is its satisfaction that sales of “all categories of analogue radio showed significant decline”. As I have pointed out previously (see graph below), sales of radio receivers generally are in long-term decline in the UK. Is this a fact that a stakeholder within the radio broadcast industry should be crowing about? It’s like two passengers on the Titanic fighting over which has the bigger cabin – does it really matter if the whole ship is slowly going down?

It should be pointed out that the DRDB data excludes sales of mobile phones, despite the fact that the majority of current models sold in the UK include FM radios, whilst not one model includes a DAB radio. More than 30m mobile phones were sold in the UK in 2008, which puts the 2m DAB radios sold in stark perspective (see recent blog entry).

Also, it should be pointed out that the vast majority of what the DRDB calls ‘DAB radios’ on sale in the UK also incorporate analogue FM. It is increasingly difficult to find a DAB-only radio to purchase in UK shops. This renders the DRDB’s proclaimed digital versus analogue victory completely hollow. For every ‘DAB radio’ sold that the DRDB hopes will automatically lead us to some kind of digital heaven, in probably 90%+ of purchases, yet another FM radio is also being added to the millions already in UK households (see recent blog entry).

Finally, recall that 8m analogue radios (without DAB) are still being sold annually in the UK. Now add to that the 30m mobile phones purchased, most of which include FM radio. Then compare it with the “incredible achievement” of 2m DAB radios sold per year, most of which include analogue radio anyway. The future of radio is looking less and less like a DAB world. Rather, analogue radios are probably multiplying faster in the UK marketplace than they have ever done, thanks to mobile phone manufacturers. This is good news for radio, bad news for investors in DAB.

These facts might not conveniently fit the DRDB ‘story’. But they are the facts.