Tag: digital switchover

SPAIN: DAB enters the last chance saloon

DAB radio in Spain has been a disaster, not least for those commercial broadcasters who invested in new technology and distribution contracts, but who have generated no additional listeners or revenues. “Zero,” said Agustin Ruiz de Aguirre, technical director of Cadena SER. “The audience is zero.” He explained that a non-existent audience generates no revenues or profits because “who would want to advertise on a medium that does not deliver any consumers?”

Spanish broadcasting law requires stations that embarked upon DAB to continue broadcasting for the duration of their licences, regardless of whether anyone is listening or not. Ruiz de Aguirre said that all the commercial broadcasters are united with a single goal: to stop having to broadcast on DAB. To date, the government has not relented, though the current licences end in 2010 and 2011.

“I do not think analogue radio switch-off will happen in either the short or medium term,” said Xosé Ramón Pousa, professor in the Faculty of Communication Sciences at the University de Santiago de Compostela. “In this scenario, DAB is at a dead end.”


“We are a rarity”, said Pere Vilas, who heads Spain’s drive for digital radio (and is the managing director of technology at state broadcaster RTVE). State radio has been simulcasting on DAB since 1998. Spanish broadcasting law has required a technical plan for DAB radio to be in place for the last year and a half, though nothing exists as yet. Such a plan is seen as DAB’s last chance to redeem itself in Spain.

“Work began a long time ago, even before digital television switchover,” admitted Xavier Redón, product marketing manager of transmission infrastructure provider Abertis Telecom. “But it is about to begin again.” Like DAB lobbyists elsewhere, Redón was quick to claim that the rest of Europe was already well down the road to DAB radio switchover. He asserted that, in France, all radios would have to be digital by 2013, and that Germany was creating a national DAB+ network in 2011.

Redón predicted that 2011 would be “key” to laying the groundwork for the re-launch of DAB in Spain. A glance at the website for DAB radio in Spain elicits a similarly optimistic stance. It states boldly: “Digital radio is a fact. It is not the future. It is the present.”

Until you realise that this latest news item was posted in April 2008.

NETHERLANDS: government forces DAB upon commercial radio

The Dutch government has adopted a ‘carrot and stick’ approach to its plans to improve the take-up of DAB digital radio. This week, it offered existing national commercial radio stations automatic renewals of their licences for a further six years until 2017, if they agree to broadcast on the DAB platform for the next six years and to cover at least 80% of the country. This renewal will avoid the licences being re-auctioned in 2011, as required by existing law. The industry response? “Commercial radio reluctantly goes digital,” said one headline.

National station Radio 538 director Jan-Willem Brüggenwirth commented: “Our digital [DAB] transmitters have been running at a loss for three years.” Radio 538 reaches 400,000 listeners per week via its internet platform, and Brüggenwirth said he expects an explosion of listening via mobile phones to internet delivered radio stations.

Martin Banga of Vereniging Commerciële Radio, the commercial radio trade body (and chief executive of Sky Radio), said: “You’re talking about millions of [radio] devices in the coming years having to be replaced, not only in homes but also in cars, which is slower than most people think.”

Banga added: “Digitalisation is costly and offers little benefit, because almost nobody has a digital receiver. It produces no additional listeners yet, so there is no additional advertising revenue. I estimate that 2,000 people have the equipment actually to be able to receive DAB, so it only goes to the handful of people that have digital radios. Compare that to the 40 million listeners who can receive FM. This means that switching to DAB is relatively costly, and produces little income.”

Originally, there had been a government plan to turn off FM radio broadcasts completely by 2015, but this has been dropped. Instead, the government will auction two national FM frequencies that had previously been licensed to failed station Arrow FM. These licences will similarly require a commitment to broadcast on DAB.


The government’s announcement stated:

“Digital radio has many advantages, such as better quality, more radio stations and the possibly of adding new services to the radio offering. In time, digital radio is intended to replace the current FM radio. To do this, however, the groundwork must first be fulfilled. The existing stations could make an important contribution through this [licence] extension.”

Government commissioned research in May 2010 had determined that the licence of each national FM commercial radio station in Holland was worth around €30 million.

[with thanks to Paul Rusling]

The Digital Radio Stakeholders Group: another 'faux consultation'

Did you hear about the inaugural Digital Radio Stakeholders Group meeting held on 1 November 2010 at the government’s DCMS [Department for Culture, Media & Sport] office? Probably not, unless you were one of the couple of dozen people who were in attendance. Otherwise, you were in the majority who were unaware of the event. There was no public pre-announcement of this meeting. Afterwards, there was only one article about it in the media trade press. Google returns ‘no results’ from an internet search for ‘Digital Radio Stakeholders Group’, even though this is the title writ across the top of the agenda circulated for the event.

You have to look in the new government’s Digital Radio Action Plan, published in July 2010, to discover:

“The Government will chair a Stakeholder Group which will be open to a wide range on industry and related stakeholders. The principle purpose of this Group will be to inform external stakeholders of progress against the Action Plan and gather views on emerging findings. We expect that the Group will meet quarterly.”

The government’s project management plan anticipated that, by Q2 2010, it would be able to:

“secure commitment from the Government Digital Radio Group and the Stakeholders Groups to the Action Plan.” [Task 5.1]

This pre-determined outcome was justified on the grounds that:

“Successful implementation of the Digital Radio Switchover programme will only be achieved through close Government-Industry co-operation. […] This will include commissioning and delivery of reports, reviewing progress against key milestones and disseminating information to key stakeholders.”

So, essentially, the Digital Radio Stakeholders Group seems to be an almost non-existent forum that has only been convened to secure some kind of external ‘rubber stamp’ for the government’s proposals on DAB radio. It will allow the government, when challenged as to the democratic basis of its DAB radio policy, to assert confidently: “We convened a stakeholders group and it endorsed our proposals.”

This is cynical government at its worst. A ‘faux consultation’ that pretends to have asked a group of somebodies to endorse a government policy for which no mandate has ever been given by the electorate. It is similar to the manipulation practised by Ofcom in its radio policymaking (viz. Ofcom’s recent decision to permit Smooth Radio to dump its commitment to broadcast 45 hours per week of jazz music, after having acknowledged that 13 of the 15 responses submitted to its public consultation were opposed to this loss of jazz).

According to a government document, the Terms of Reference for the Digital Radio Stakeholders Group are as follows:

“Purpose
To enable a wide range of organisations to contribute to the process of delivering the Digital Radio Action Plan

Objectives
• To inform all stakeholders of progress with the Action Plan
• To seek the views of stakeholders on future progress of the Action Plan
• To provide an opportunity for all stakeholders to share news, views and concerns relevant to the Digital Radio Action Plan

Membership
Any organisation with a valid interest in the objectives of the Digital Radio Action Plan may be a member. Members will include consumer representative bodies, broadcasters, manufacturers, retailers, vehicle manufacturers, transmission network operators, content providers. The Group will be chaired by BIS in the first instance, though in principle the Chair could be any person acceptable to the majority of stakeholders and able to represent the collective views of the stakeholders to the Steering Board.

Mode of operation
The Digital Radio Stakeholders Group will meet quarterly.
The Chair will report the views of the stakeholders, as expressed through the meetings of the Stakeholders Group, to the Steering Board.”

So what happened at the first meeting? Very little, according to some of those who were present. It was a game of two halves. In the first half, the bureaucrats put their case. From the government, Jane Humphreys, head of digital broadcasting & content policy, BIS [Department for Business Innovation & Skills]; John Mottram, head of radio & media markets, DCMS; and Jonny Martin, digital radio programme director, BIS/DCMS. From Digital Radio UK, Ford Ennals, chief executive; Jane Ostler, communications director; and Laurence Harrison, technology & market development director. Then, in the second half, representatives from Age UK, the Consumer Expert Group, Voice of the Listener & Viewer and W4B raised issues on behalf of the consumer.

At the end of it, I guess the government-appointed chairman could return to her government office, tick the box on the government wall planner that says ‘stakeholder commitment’ and be pleased that this ‘rubber stamp’ had cost the taxpayer only an afternoon’s salary plus some tea and biscuits for the ‘stakeholders’. Well worth it!

More interesting than noting those who attended is identifying who was not there:
· No presentation by Ofcom, whose longstanding ‘Future of Radio’ policy has forced the DAB platform upon the public for almost the last decade
· Nobody from the largest commercial radio owners – Global Radio, Bauer Radio and Guardian Media Group – that have considerable investments in DAB multiplex licences

After the meeting, under the headline ‘RadioCentre quits digital radio meeting’, Campaign reported:

“RadioCentre, the commercial radio trade body, has walked out of discussions over the future of digital radio after the BBC licence-fee settlement did not commit BBC funds to roll out DAB radio. The body refused to attend a [Digital Radio Stakeholders] meeting on 1 November after the [BBC Licence Fee] settlement, published last week, included provision only for [BBC] national DAB [upgrade].” [I noted this development in a blog last month]

Whatever RadioCentre’s reason for non-attendance (and the story in Campaign has not been refuted), this kind of stance is a disgrace. Raising two fingers to the people you are supposed to be persuading of your DAB policy is not a clever PR strategy for the commercial radio industry. But I am not surprised. All the organisations pushing for DAB radio have increasingly adopted a ‘bunker’ mentality that precludes any direct contact with the public. What we appear to have now is:
· Ofcom refusing to engage in public discussion about its DAB ‘Future of Radio’ policy
· The government organising a Stakeholder Group to rubber stamp its unrealistic, dictatorial policy on DAB radio
· Digital Radio UK refusing to engage in public explanation of its DAB campaign work, as illustrated by its non-existent web site
· RadioCentre and its members now refusing to attend a meeting to explain just how/why DAB is still being pursued

At the same time, the public – the consumers, the 46,762,000 adults who spend 22.6 hours per week listening to radio – have been omitted altogether from these manoeuvrings that are still focused upon trying desperately to force them to purchase DAB radio receivers. The public had been omitted from the proposals at the very beginning of DAB more than a decade ago, which is precisely why it failed, and they are still being omitted today.

This is not the first time that government ‘stakeholder’ meetings about DAB radio have been organised simply to tick a box. As part of the previous government’s attempts to solve the DAB problem, in 2008 it convened a Digital Radio Working Group with two similar ‘stakeholder meetings’ held at DCMS. I attended and felt they existed purely for the bureaucrats to report back to their superiors that they had done something to ‘disseminate’ their policies. DCMS’ own write-up of the first meeting recounted bluntly:

“A stakeholders meeting was held on 10 March and offered opportunities for a wide range of views to be heard.”

A place where “views” were merely “heard”. The ineffectiveness of these earlier stakeholder meetings is demonstrated by re-visiting the agenda for the first of them. The issues tabled for discussion nearly three years ago (“How to make digital radio the predominant platform for listening to radio in the UK? What are the barriers to this? How can these barriers be overcome?”) still remained the same at this month’s meeting. Worse, none of the DAB technical problems identified then have been solved in the interim. And guess what? All trace of these 2008 meetings ever having happened has been erased from the DCMS website (in 2008, I had had to write to DCMS to get them to add the meeting details to their website).

The next meeting of the Digital Radio Stakeholders Group will be held on 3 February 2011 at DCMS/BSI, 1 Victoria Street, London SW1H 0ET. If you belong to any kind of community group or organisation (even if it is your neighbourhood watch) whose members are likely to be impacted by the government’s policy on digital radio switchover, I suggest you write to Jane Humphreys (e-mail to [first name][dot][second name]@bis.gsi.gov.uk) and ask for an invitation to this next meeting.

‘Stakeholder’ radio listeners should turn up to the February meeting and shout: “I’m mad as hell and I’m not going to take this any more!” … or maybe the DAB plug will already have been pulled by then.

BBC head of radio: DAB not "a clear enough offer to listeners"

The Tony Livesey Show, BBC Radio 5 Live, 28 October 2010 [excerpt]
Stephen Nolan, interviewer (presenter, BBC Radio Ulster) [SN]
Tim Davie, Director, BBC Audio & Music [TD]

SN: There are big problems with the digital spectrum, aren’t there, because we cannot seem to hit any target that we are given for people switching to digital?

TD: I don’t think we’ve had many targets … Let’s be honest, I don’t think we’ve had many targets in the past. Digital stations are doing well. Digital listening – we’ve got to be careful – includes online, which is doing pretty well, there’s more we can do. Then also you’ve got DAB. Now DAB, you’re right, it’s been marginally growing for a while …

SN: Why?

TD: I just don’t think it’s been a clear enough offer, in my language, to listeners. I mean, people love radio. They are very happy with their FM radio. Why on earth would you change? And I think the radio industry has to say: ‘the reason you will change is – here’s a load of content’. And there’s clues like 6 Music, or other …. you know, that people love. And here’s a load of stuff that people love, and here’s a better … this device does something better than the other one.

SN: Or, Tim, it’s for the BBC to take a huge risk, and a controversial risk at that, and to withdraw mainstream programming from the FM spectrum and put it onto DAB. Imagine how the numbers would soar if it had [BBC Radio 1 breakfast DJ Chris] Moyles or …

TD: [interrupts] Imagine my inbox!

SN: Exactly, exactly. It’s a serious point.

TD: Sure.

SN: Imagine if you had Moyles or [BBC Radio 2 breakfast DJ Chris] Evans exclusively on DAB, or a massive programme.

TD: Right! And … we could do that. The issue would be that, with current coverage levels and with the amount of devices – particularly in Northern Ireland – I would basically be saying that you can’t listen to it in your kitchen, and everyone pays the Licence Fee. So I think the strategy for digital, where we are taking things away, is not going to work. My approach would very much be that I do want you to feel a bit of pain for not having a digital radio, but that pain is not about not getting The Archers, or not getting Chris Moyles. It’s about: ‘you could get a bit more over here’, or ‘there’s a bit of [Radio] 4 Extra over here that you could really do with’, and that’s what television did with some of those channels.

SN: Do you think, in terms of the internet, that radio is going to fundamentally change?

TD: I think there will be a lot more on-demand, obviously, so people will expect to be able to call up a programme and …

SN: I’m talking about the [UK] Radioplayer, obviously, which people are describing as the new YouView for radio.

TD: Well, er, yeah. Basically, the Radioplayer is … we’ve got the whole industry together. Only about 3% of listening is online and I can’t understand that, as head of radio. I know I’m biased but, at the end of the day, when I’m shopping and doing my Tesco shop or wherever online, why aren’t I listening to the radio? [to SN] Well, you would relate to this because it means more listeners. I think that one of the things is that I think it’s a bit confusing. You’ve got the BBC on the iPlayer, which is pretty good, and we’ve got other bits and … So we’ve put it all together and there will be a thing called the Radioplayer. Now, it gets a bit complex, but I think the YouView thing that you refer to is when you’ve got an internet connection to your television. Now, when you click your television on, I want one Radioplayer icon where you can go in and listen to all the radio. Now, the …

SN: On the TV?

TD: Yeah. On any screen – sorry to sound ‘new age’ – any screen anywhere, whether it’s a … whatever the size of it, you can go and get all your radio services. We don’t currently have that.

DAB radio usage: going nowhere slowly

Sometimes it seems as if the UK radio industry operates in two parallel universes. On the one hand, there is the virtual world of the DAB radio lobbyists, a reality that only seems to exist within the confines of their Soho office and its funders. On the other hand, there is the real world of the 47 million people in the UK who listen to the industry’s radio stations each week, spread far and wide across this green and still largely analogue land.

It was only last week that Ford Ennals, chief executive of Digital Radio UK, was telling anybody who would listen that:

· “There is now real momentum in the transition to digital radio…”
· “… significant progress towards building momentum for digital radio…”
· Digital radio switchover is a “matter of when, not if”
· “We have set a course to double listening and expand coverage by 2013, and to switchover by the end of 2015”
· “We do believe it is possible to get there in the four- to five-year time period…”

Yet, today, RAJAR published the latest listening figures for UK radio. None of Ennals’ statements are in any way supported by the official radio listening data. “Momentum”? No. “Real momentum”? No. “To double [digital] listening by 2013”? You have to be joking.


The headlines for all radio listening via platforms in Q3 2010 were:
· Analogue radio’s share of listening up from 67.0% to 67.6% quarter-on quarter
· Digital radio’s share of listening up from 24.6% to 24.8% quarter-on-quarter
· DAB radio’s share of listening down from 15.8% to 15.3% quarter-on-quarter.


At its current long-term growth rate, the government criterion of 50% of radio listening via digital platforms would not be achieved until year-end 2018. The statistical probability of that 50% threshold being reached by 2013, the achievement of which Ennals is supremely confident, is zero. Even Derren Brown could not pull off that stunt.


And so these two radio worlds continue on their parallel paths. Digital Radio UK continues to insist that everything in the digital radio switchover garden is sweetness and light, whilst wilfully oblivious to the fact that the majority of radio listeners simply could not care less about DAB – even after more than a decade of being told by the government, Ofcom and the largest broadcasters that DAB is ‘the future of radio’.

The verdict of UK radio listeners on DAB seems perfectly transparent in the RAJAR data, though many in the radio industry still refuse to listen. On the other hand, the activities of Digital Radio UK, still trying to persuade us of DAB’s virtues, are anything but transparent. After 10 months of existence, its web site remains empty. And the web site of its forerunner, the Digital Radio Development Bureau, has been conveniently deleted so that all the empty promises, inaccurate forecasts and ridiculous propaganda that were generated about DAB over the last eight years are no longer publicly available.

Those with experience in the radio industry understand perfectly what happens to radio stations that refuse to listen to their listeners, radio stations that refuse to engage in truthful dialogue with their audience, and radio stations that are still broadcasting exactly the same tired messages as they did a decade ago. They die … and nobody misses them when they are gone.

Digital Radio Upgrade? More like Digital Radio Groundhog Day.

It was the Radio Festival, the industry’s annual get together. Everyone wanted to talk about how wonderful the DAB future of radio would be. But nobody wanted to explain how ‘Digital Radio Upgrade’, the government policy to make the UK’s DAB transmission system fit for purpose, will be paid for. It is the radio sector’s favourite parlour game: pass the DAB Upgrade parcel.

The first player is the BBC:

Q: “Very briefly, a one-word answer. Do you have any money set aside now to spend on [Digital Radio Upgrade]?”

Tim Davie, director of BBC Audio & Music: “No.”

Second is commercial radio:

Q: “Does commercial radio have any money to spend on [Digital Radio Upgrade]? […] What’s your guess?”

Phil Riley, chief executive of Orion Media: “‘No’ is the answer at the moment.”

Third are the politicians:

Jeremy Hunt MP: “I think the most important thing is not something the government can do, but something the industry can do …”

But hold on. This dialogue came from the Radio Festival in 2009…. We need to fast forward one year.

It was the Radio Festival, the industry’s annual get together. Everyone wanted to talk about how wonderful the DAB future of radio would be. But nobody wanted to explain how ‘Digital Radio Upgrade’, the government policy to make the UK’s DAB transmission system fit for purpose, will be paid for. It is still the radio sector’s favourite parlour game: pass the DAB Upgrade parcel.

The first player is the BBC:

“It remains to be seen who will pick up the £100m tab [for Digital Radio Upgrade], with [Tim] Davie saying he did not have the necessary funds.” [from The Guardian]

Second is commercial radio:

“[Global Group chief executive Ashley] Tabor said the commercial [radio] sector will only pay for the rollout of those local DAB multiplexes that are commercially viable.” [from The Guardian]

Third are the politicians:

Ed Vaizey, Minister for culture, communications & creative industries: “The BBC has to work with me on coverage. I am talking to the BBC and I hope to accelerate the pace of digital radio coverage.”

Déjà vu, anyone? Delegates paid £899 to witness this repeat performance. I have already placed my bet on precisely the same sentiments being made at the Radio Festival in 2011, though the odds offered by the bookie were not at all good. On the coach home from the Festival, everyone must have joined in the usual radio industry singsong:

“When do we want digital radio switchover? Now!
Who do we want to pay for DAB Upgrade? Somebody else!”

And while we are on the topic of déjà vu, I am reminded of an analyst report about DAB from June 2008, in which I had written:

“The digital switchover of radio is so far into the future as to be intangible.”

I was swiftly rebuked for this viewpoint in an e-mail from a radio sector CEO.

Now fast forward to the 2010 Radio Festival. Andrew Harrison, chief executive of commercial radio trade body Radio Centre, said:

“There is no doubt if [digital take-up] carries on at its current projectory we will never get there.” [sic]

The current RadioCentre strategy remains inexplicably that the BBC should pay not only for improvements to the BBC’s DAB radio transmitters, but also for the commercial radio sector’s (see earlier blogs here and here). The nails seem to have been hammered firmly into that coffin by this week’s speed-axing session between the government and the BBC.

Although subsequent press reports have implied that the cost of the (previous) government’s Digital Radio Upgrade policy will now be underwritten wholly by the BBC, the available evidence says otherwise. The resulting four-page letter from the government to the BBC Trust set out in detail all the new items to which the BBC’s funds will have to be applied in future. The World Service? Yes. BBC Monitoring? Yes. S4C TV? Yes. Local television? Yes. DAB radio? No….

Oh, hold on. In the penultimate paragraph on the final page there is a single sentence about DAB penned by Secretary of State Jeremy Hunt:

“I also welcome the BBC’s plans to enhance its national DAB coverage in the period of this agreement, and to match its national FM coverage as a switchover date draws near.”

But while the rest of the letter is littered with the oft repeated phrase “The BBC will …”, this solitary mention of DAB radio is couched only in terms of “BBC plans” without a hint of compulsion. DAB is an obvious afterthought here and, much to RadioCentre’s chagrin, it refers only to the BBC improving its own DAB transmitter coverage and not to improving commercial radio’s.

In the coming months, when the inevitable axe falls sharply across BBC budgets as a result of this week’s gobsmacking (© Ray Snoddy) agreement between the BBC and the government, DAB radio must be an obvious short straw. Lose BBC local radio, or lose DAB? BBC local/regional radio accounts for 15% of BBC radio listening. BBC digital radio stations account for 4%. Here comes the chopper ….

BBC Trust chair notes "the absence of a coherent digital [radio] strategy"

On 8 September 2010, Sir Michael Lyons, chair of the BBC Trust, and Mark Thompson, director general of the BBC, appeared before the government’s Culture, Media & Sport Committee. They were asked about BBC radio policy by a committee member:

David Cairns: It will be brief because it is about radio. Clearly the [BBC Radio] 6 decision has come and gone. Where does this leave you? There seems to be a slight divergence between the Trust and the executive on the vibrancy and distinctiveness of the offer. You wanted to close Radio 6 to make [Radios] 1 and 2 more distinctive. Now 6 is staying open, so a couple of headlines on where we are in terms of the strategy in radio, with particular reference to 1 and 2?

Sir Michael Lyons: It isn’t part of the Government’s structure that the Trust and the Director General have to agree on everything and indeed we’ve had some criticism for not more frequently exposing to public scrutiny the debates which do take place, which are often challenging. I think getting the balance of that right between how much of that discussion is open is I think a matter for reflection.

Now let’s turn to the strategic review: the Trust rejected the proposal to close BBC 6 in its current form believing that the arguments didn’t stand up as a result of the consultation analysis we’ve done. But what that proposal did do was to bring into really quite sharp relief the two big strategic issues sitting behind it. The first of those – the greater distinctiveness of Radio 1 and Radio 2 – very much the subject of the service reviews that the Trust had undertaken earlier in the year, requiring both stations to work more energetically to distinguish themselves from each other and to serve a rather different audience demographic.

The second issue, of course, is the absence of a coherent digital strategy – not an issue for the BBC alone because it immediately brings in the issue of where the Government stands on DAB radio for the future. So where we are at the moment is the Director General is now working on both of those issues, recognising those are the big issues, the big strategic issues, and 6 continues perhaps for ever but certainly until both of those big issues are clear to us.

Mark Thompson: I think Michael answered that very clearly. We have had, I believe, a real success with our television portfolio, including our digital channels, in helping encourage the public to move from analogue to digital television. We are not alone in that, Sky has done a great deal to help with that and so have others. But we know that our digital television channels have made a significant difference in people wanting to take digital television up. We have yet to see the same level of success with digital radio. We are very committed to digital radio. We support the Government’s and indeed the previous Government’s ambitions around moving towards analogue-to-digital switchover in radio as well. The challenge for the BBC is coming up with a portfolio of services which firstly encourages people to sign up on digital radio, but in ways which support the rest of the radio market rather than producing adverse competition.

We need to make sure that the core mainstream channels, like Radio 1 and Radio 2, are sufficiently distinctive, are really doing something different from their commercial counterparts, but also that we have a range of attractive but also distinctive new digital services.

So I think this is a hard Sudoku. It’s not absolutely straightforward because there are a number of different things going on, and I take the BBC Trust’s response on 6 Music I think in the way it is intended which is there are bigger things at stake here. Go back and look at the broad radio strategy and that’s what we’re doing at the moment.

——-

On 14 September 2010, Jeremy Hunt, Secretary of State for Culture, Media & Sport, appeared before the government’s Culture, Media & Sport Committee. He was asked by a committee member about progress with digital radio switchover:

Damian Collins: There was a report in the press this morning claiming that a report to your Department has been published today by the Consumer Expert Group, saying that 2015 is too early as a target date for digital radio switchover, and even questioning the consumer demand for it. I wonder what your views are on that?

Mr Hunt: On 8 July Ed Vaizey published a digital radio action plan. We made it very clear that we think when it comes to radio, the future is digital. We aspire to the 2015 date but there need to be some changes in consumer patterns of radio consumption before we would agree to a switch-off of the analogue spectrum. Those include a greater-than-50% market share for digital radio listening. At the moment it is about 25% and DAB is only 16%. It includes, for national radio stations, coverage that is as good as FM and, for local stations, 90% coverage and coverage on all major roads. So until we are confident that those conditions are met, we won’t be signing the bit of paper that says there will be switchover in 2015.

Damian Collins: But do you still see 2015 as a date the industry should be aiming for?

Mr Hunt: I hope that we can deliver it by then but they need to work much harder to persuade consumers of the benefits of digital radio. I would much rather this was a process similar to the transition from records to CDs and from CDs to iPods, which was driven by changes in consumer behaviour, rather than something that we change as a sort top-down mechanism.


[these transcripts are uncorrected and are not yet an approved formal record of proceedings]

Shameless Book Plug

Apologies for the interruption to my normal radio sector analyses, but I wanted to let you know that a book of my writings about DAB radio was published this week. It collects together 99 of the essays that have appeared in this blog over the last two years concerning the digital radio switchover issue in the UK. The period between 2008 and 2010 was a critical ‘make or break’ time for DAB which ended with the legislation of the Digital Economy Act. But have any of the committees, consultations, working groups, reports and recommendations from this period made any difference to the slowing take-up of DAB in the UK? No.

Leslie Burrage, chief executive of Roberts Radio, one of the main UK manufacturers of radio receivers, said recently:

“I’ve been surprised by how many of my peers at the golf club have adopted internet radio and some of those are people who can’t even get a decent FM signal, never mind DAB. The key issue with DAB and the migration to FM is going to be dictated by the speed at which at the motor car can be migrated, and there is no easy solution. If the migrations takes 20 or 25 years to go as it did from FM, the future is just possibly wi-fi.”

Digital radio switchover seems doomed and the only people still talking it up are those who have a direct stake in it, either through their financial investments, or from earning their living from talking it up. Because the UK started on the DAB switchover trail earlier than other European countries, our experiences have relevance to markets that started later on the DAB journey.

This week, it has been interesting to see the interest my book has spurred in markets such as Norway, Denmark and Italy where, like the UK, DAB is still being pursued despite widespread consumer indifference. In Norway, a news story about the local receiver market appeared in the newspaper Aftenposten headlined ‘Customers do not want DAB: FM is still selling like hotcakes’. The buyer at a Norwegian electronics store said that DAB was already a flop and he was quoted: “So far, this year, according to industry sales statistics to which I have access, only one DAB radio has been sold for in-car installation”.

Many countries are awaiting some kind of government decision as to whether digital radio switchover will still be a policy goal. In Norway, a government report on the DAB issue is to be published later this year. In France, a government report on the financial model for digital radio was meant to have been unveiled this week, but was not. In Germany, the 21 September deadline by which state and commercial radio was meant to have submitted a joint plan for government funding to re-launch a national DAB+ multiplex passed without agreement and has had to be extended to 15 December 2010. One German report said “it is highly doubtful whether the negotiating parties will agree by the [new] deadline.” Another report said: “experts suspect that this is the last chance for DAB+.”

In Italy, radio stations that have started broadcasting in DAB and DRM are angry at the lack of digital radio receivers in their shops and have turned to UK manufacturer Pure Digital for help. One Italian report asked: “Do people feel the need to replace their old FM radios? Especially in the era of the smartphone, internet radio and applications, the answer seems obvious.” In Spain, the existing DAB radio licences that were initially issued for a ten-year period in 2000 have just been extended to fifteen years, in the face of widespread consumer apathy towards DAB radio.

It is evident that the digital radio switchover issue continues to generate a lively debate in many European countries. My hope is that our experience in the UK can help other countries make an informed decision about the adoption of a realistic plan for ‘the future of radio’ in their own markets.

DAB DIGITAL RADIO: LICENSED TO FAIL
GRANT GODDARD
Radio Books, London
ISBN 978 0 9564963 0 0
paperback 297×210 mm, 314 pages
1 October 2010
book excerpts here
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Book plug over.

FRANCE: "In no country is digital terrestrial radio working out"

From 1 September 2010, French law required that every new radio receiver sold in France which includes a multimedia display must offer reception of digital terrestrial radio. The law had been proposed in 2007 when it was envisaged that digital radio would be up and running by now. However, in France, digital radio is barely at the starting block after several launch dates have come and gone without event.

The same French law requires that, from 1 September 2012, new radio receivers (except for car radios) must be capable of receiving digital radio. How realistic is this date when arguments continue in France even about which digital radio transmission system – T-DMB or DAB – to use? SatMag suggested that legislation will need to be amended to account for the delay in launching digital radio.

Then, from 1 September 2013, the law requires that all radios sold in France offer the capability to receive digital terrestrial radio. This date, too, is likely to have to be changed.

French publication RadioActu described the current state of progress:

“Presently, with the exception of experimental broadcasts such as in Nantes, digital terrestrial radio in France is stalled.”

On 30 September 2010, the initial findings of a further government report on ‘the digital future of radio’ will be published, with the detailed report examining the economic model for digital radio anticipated by 30 November 2010.

Just as in Britain, French government predictions that digital radio would be quick to take off have proven misguided. In December 2007, then Minister of Culture Christine Albanel had promised that “Christmas 2008 will be digital radio [season].” It was not. The launch was postponed to December 2009, and then to mid-2010, and now again to 2011.

At the time the law was made a statute in France in 2009, the British government had just published its Digital Britain consultation. Quentin Howard, President of the WorldDMB Forum, said then:

“This ringing endorsement of digital radio from two major governments is a positive move which we hope will encourage other European governments to take similar steps. The bold position taken by the French government recognises the need to ensure universal availability of digital receivers and gives the radio industry a solid foundation and certainty with which to plan its digital future.“

How wrong can you be? All that the “bold” French legislation has proven is that a law is meaningless without the necessary action. This is an obvious truism. However, bureaucrats in France, the UK and elsewhere still seem to believe that merely stating that digital radio switchover will happen in some official document is enough to make it happen. Those who have long been working at the coalface of the radio industry know better. Jean-Paul Baudecroux, chairman and chief executive of French radio group NRJ, said recently:

“In no country is digital terrestrial radio working out.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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