Tag: digital radio

Funding DAB radio infrastructure upgrade: still 'no'

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

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

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

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

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

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

This is not going to happen, is it?

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

Will it be DAB?

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

Digital radio: Parliamentary Question

House of Commons: Written Ministerial Statements: 9 September 2009

Digital Broadcasting: Radio

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

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

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

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

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 One – an end to wishing and hoping

Today, transmission company Arqiva announced that it had finally acquired the remaining 63% stake that it did not own of Digital One, the national commercial radio DAB multiplex, from Global Radio. Tom Bennie, Arqiva CEO said: “Arqiva now plans to invigorate DAB with new channels and services and, as an independent operator, we’re in a good position to realise the full potential of the Digital One multiplex.”

Let’s go back in time.

In March 2007, National Grid Wireless had applied to Ofcom for a new licence to operate a second national commercial DAB radio multiplex and it noted in its application that:

• “Few of the digital-only services on Digital One have been marketed aggressively”
• “Awareness and reach conversion [of digital-only stations] is not keeping pace with the rise in DAB digital radio penetration”
• “Over the past three years, there is no discernable positive [listening] trend for any of the [digital-only] services on Digital One, except for Planet Rock”
• “Despite increasing DAB penetration, the proportion of listening generated by DAB homes to these [Digital One digital-only] services has not altered significantly”
• “DAB digital radio listeners are primarily using their DAB radios to tune in to established [analogue] services”
• “Newcomers to DAB digital radio are primarily replacement set purchasers who have not been motivated by the prospect of new channels or improved functionality”
• “The lack of development of DAB digital radio in cars is also a possible threat to its development”
• “There is [advertising agency] dissatisfaction not only with the current digital radio offering as an advertising medium …. [but also] that too many of the existing stations sound alike and are trying to appeal to the same people”

National Grid Wireless did not win the licence, as Ofcom awarded it to Channel 4 in July 2007. Then Arqiva acquired National Grid Wireless. Then, in 2008, Channel 4 returned its licence to Ofcom unused. Ofcom has not re-advertised this second DAB multiplex licence, so there remains only one multiplex, owned by Digital One.

Now it has been two years since National Grid Wireless identified the problems with Digital One, and its successor – Arqiva – is suddenly in a position where it owns Digital One and it is in the driving seat to do something to fix it. The question is whether that two-year gap has now made it too late in the day for Arqiva/National Grid Wireless to fix things. Two years is a long time in technology, and time has not been kind to DAB. There are significantly fewer digital radio stations on-air now, there is less appetite for investment in new ventures, and commercial radio is suffering badly from the recession.

One wonders what might have happened subsequently if:
· Ofcom had not advertised a second national DAB multiplex?
· Ofcom had not awarded that licence to Channel 4?
· Channel 4 had not burnt through up to £9m of funding before deciding to scrap radio?
· Commercial radio had got on with the task of fixing DAB itself, instead of hoping that Channel 4 would kick-start the platform?
· Fru Hazlitt had stayed at GCap Media long enough to offload Digital One to Arqiva a year ago for £1?

With hindsight, it is already beginning to look as if that two-year period (March 2007 to July 2009) offered a critical opportunity for DAB. Critical in the sense that a lot needed to be achieved, that there was a lot of wishing and hoping for things that never materialised, and much seemed to eventually go backwards, instead of forwards, during that time. If you re-read the bullet points listed above from National Grid Wireless’ application, you realise that these issues have still not been resolved during the last two years. In many ways, regrettably little of significance has yet changed. We are still waiting.

It’s like a DAB Groundhog Day. Every day you wake up wishing and hoping things will be different, but every day the same issues still need solving, exactly as they were the day before, and everyone ends up talking again about finding solutions, but the day eventually comes to an end. And then tomorrow it starts all over again.

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.”