Tag: UK commercial radio

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.

"Above all else, Durham FM will be local" …. a promise is a comfort to a fool

Durham must be unique in Britain in that it once had its own local radio station and then had it taken away. BBC Radio Durham closed down in 1973 when the BBC, then limited to just twenty local radio services around the country moved the station in its entirety to Carlisle. It was reasoned that Durham could be adequately served from the north by Radio Newcastle and from the south by the then Radio Teesside. The same arguments can be heard today when, despite the proliferation of electronic media over the past thirty years, all the mass media serving the Durham area are based on Tyneside, on Teesside, in Darlington or in London. Our research and consultations confirm an almost universal desire for Durham to have its own radio station – for Durham and from Durham.

These words are taken from the winning licence application submitted to Ofcom by The Local Radio Company in January 2005 for the new Durham FM licence. The application continued:

There is an unduly low level of contact between the City of Durham and the many towns and villages which surround it. Those representing the towns and villages in the Districts away from the City also point to a reluctance to travel between those towns and villages. Local people feel marginalised by the existing media. When most local news and information comes from media dominated by out-of-area conurbations is it surprising that local awareness and pride starts to suffer? We see this as a major opportunity for Durham FM to provide an entertaining and informative local radio service which will have wide appeal…..

Durham FM will broaden the range of local commercial radio services by offering the only programming to focus exclusively on Durham City and the surrounding districts. In addition to the full range of national services, the proposed TSA is served by local radio stations based around Tyneside and Teesside. From the BBC there are BBC Radio Newcastle and BBC Radio Cleveland, while from commercial radio Metro Radio, Magic 1152, Century FM and Galaxy 105-106 all broadcast from Tyneside with TFM and Magic 1170 having their studios in Stockton-on-Tees…..

Only 8% of total news time on Metro Radio was devoted to stories drawn
from the proposed Durham FM editorial area…. With slightly more time devoted to news bulletins than on Metro, local news [on Magic 1152] about the Durham area featured a little more frequently, but still only 10% of news bulletin time was devoted to material directly relevant to the Durham FM TSA…. [On Century FM] our independent monitoring agency failed to identify a single reference to anywhere within the proposed Durham FM TSA…. There was no locally relevant news [on Galaxy FM] for the Durham FM area….

Durham FM will focus entirely on Durham and the districts surrounding it. Our programmes will be locally produced and presented from studios in Durham by people who know and understand the area. This independent monitoring of the existing services shows that no other ILR station in the area provides anything approaching the level of relevant local news and information which are demanded by the local population and will be offered by Durham FM. During the period monitored very few local news stories were included and there were very few locally relevant programme items on any of the four ILR services. Durham FM will become established as the only dependable, independent and up-to-the-minute source of information about what’s happening in the towns and villages of the Durham area….

Local material is vitally important to the success of Durham FM. Our detailed quantitative research, detailed later in this application, confirms that a gap exists in the Durham radio market for a greater quantity of Durham city and county news and local information. Whether expressed in terms of speech items that listeners would like to hear or those that they consider ‘essential’ listening it is local Durham and North East regional news, along with local weather forecasts and traffic and travel news for the Durham county area, that head the list of requirements….

All programmes on Durham FM will be locally produced and presented with the exception of a nationally networked chart show during three hours on a Sunday afternoon/evening and one latenight ‘phone-in of three hours duration each week. A limited further amount of appropriate network programming may be added outside weekday daytime once our local audience is established, after the second year on-air, but a minimum of 18 hours per day will always be locally produced and presented.

Following up this written application, Ofcom asked The Local Radio Company explicitly:
Are there any cost-saving sharing of resources planned arising from Durham FM’s close geographical proximity to both Alpha 103.2 and Sun FM?

The written answer from The Local Radio Company was:
It is our intention to operate Durham FM as a separate radio station with its own facilities, staff and objectives.

At its meeting on 7 April 2005, Ofcom’s Radio Licensing Committee [RLC] considered three competing applications for the new Durham FM licence and decided to award it to The Local Radio Company. Ofcom explained that this decision was made because:

…the speech commitments contained in Durham FM’s Format (such as a seven-day local news service) would improve Durham-specific news and information provision in the area, and that the overall programming proposals contained in the Format were both deliverable and would cater for local tastes and interests, as demonstrated by the group’s research. The RLC considered that, in relation to Section 314 of the Communications Act 2003, Durham FM’s programming proposals contained a suitable proportion of local material and locally-made programmes. The station will offer locally-made output for 18 hours per day, and the Format includes commitments to delivering a range of local material. The Committee noted that, after two years on air, the station’s Format gives it the ability to air networked programming at off-peak times, if it so chooses. [emphasis added]


Durham FM launched on 5 December 2005. The station failed to come anywhere close to the audience forecasts made in its licence application (see table). A radio station’s revenues are closely proportionate to the total hours listened to it. On that assumption, Durham FM must have been around 74% below its revenue target for Year Three – a catastrophic performance for a business that is operated on largely fixed costs. So how come The Local Radio Company’s forecasts in its licence application were so wildly optimistic? The application had said:

We have no doubt that these audience projections are realistic and achievable in the light of our experience of comparable services throughout Britain…. We have every confidence that Durham FM’s locally focussed programming, backed by a significant launch budget, will establish a substantial audience within a relatively short period of time.

And how come Ofcom was so confident that the Local Radio Company could meet these targets? Ofcom said:

Durham FM’s audience and revenue forecasts were considered to be achievable, and in this context RLC members noted the excellent ratings performance and track record of both Sun and Alpha in nearby areas which have a line-up of competitor stations very similar to that which the new Durham service will face.

So just how “excellent” were the performances of the neighbouring Sun and Alpha stations owned by the same applicant?


When Ofcom’s Radio Licensing Committee met in April 2005 to consider the Durham licence, it was becoming evident that Sun and Alpha were losing listening at an alarming rate, both stations having peaked in 2002 under previous owner Radio Investments Ltd. Similar audience losses were experienced across most stations owned by The Local Radio Company, following its disastrous decision in 2004 to homogenise the branding and content of its portfolio under the slogan “music:fun:life”. Essentially, the group sucked the quirky ‘localness’ out of its local stations and, unsurprisingly, listeners subsequently turned off in droves.

The end result? Durham FM presently has a 4.0% share of listening in its local market of 201,100 adults. By comparison, Galaxy has a 9.5% share, Magic 6.4%, Century/Real 6.5% and Smooth 4.8%. Metro FM and TFM together probably take 7.5% (Durham FM chooses not to itemise these two stations in its RAJAR report). BBC local radio takes a significant 8.8% share, even though Durham is only on the periphery of both BBC Radio Newcastle and BBC Radio Tees. [RAJAR Q1 2009]

In December 2008, The Local Radio Company submitted an application to Ofcom to move Durham FM’s studios to Sunderland, effectively closing the Durham location, but continuing to provide ‘local’ programmes for Durham from Sun FM in Sunderland. It argued that “the losses for Durham FM are significant”, the details of which had “been provided, in confidence, to Ofcom”. It argued that “this co-location will allow the station to build its audience on a more stable and secure financial basis” because “it has a poor financial history” and that “the proposals will be imperceptible to listeners in the local market place”.

At its meeting on 23 February 2009, following a five-week public consultation, Ofcom’s Radio Licensing Committee refused this request to move Durham FM to Sunderland because it decided that “the case for the existence of exceptional circumstances had not been made”. However, Ofcom did suggest that it could reconsider this request “later in the year” following publication of the Digital Britain final report. Interestingly, Ofcom noted that a previously approved request in March 2008 to allow the Durham station to share programming with Alpha FM in Darlington “has been scrapped by the licensee [so as] to secure all-local programming output on Durham FM”.

With an immediate move to Sunderland now off the agenda, The Local Radio Company moved on to Plan B. Next, it applied to Ofcom to effectively merge the output of Durham FM and Alpha in Darlington into one station to be called “Alpha”. So what would remain of the promised local programming for Durham? “Weekday breakfast programming and four-hour daytime shows on Saturday and Sunday will remain separately and locally produced in Durham….”, said the application. “At all other times, local programming will originate from Darlington”. Boldly, the application argued that “the character of the [radio] services will remain substantially unchanged” and “the essentially local nature of the [radio] services will remain”.

Suddenly, Durham and Darlington were to become a single local radio market:
We believe there is considerable editorial justification in combining much of the local programming of Durham FM and Alpha, and in originating the shared programmes from Darlington. Until 1997, when it became a unitary authority, Darlington was part of County Durham and still very much leans culturally towards the county. Equally, for listeners and advertisers in the county, the attraction of a local radio service focusing on Durham is greatest for those more remote from the Tyneside conurbation, particularly those in the towns nearer to Darlington. The general public, listeners and advertisers are accustomed to the County Durham local press being substantially based in Darlington.

Am I the only one who finds this line of argument totally unbelievable? Firstly, it directly contradicts the opposite assertions made in The Local Radio Company’s application for the licence four years earlier that Durham was not well served by other media in the region. Secondly, the licence application had demonstrated there were few community links between Durham and either Tyneside or Teesside. Thirdly, my personal experience is that, having lived in Durham for seven years, I never visited Darlington (which is 19 miles away by road), though I did go to Newcastle (16 miles) and Sunderland (13 miles) regularly. However, Ofcom barely blinked at the contradictions and was so eager to go along with the story that it approved this proposal without any kind of public consultation, stating:

Durham has already regionalised four of those hours, and the request sets out clearly the affinities between the two areas [Durham and Darlington]…. This is not seen a major change to the stations’ output, and the request is granted.

So, for the second time, Durham has effectively lost its local radio station and now retains only a local breakfast show hanging by the barest thread. I am not trying to argue that Durham must have a local commercial radio station, regardless of how much money it might lose. But, once again, the outcome for radio listeners in Durham seems to raise questions about the robustness of our system of local radio licensing:
· Before advertising the Durham licence in 2004, did Ofcom properly evaluate the potential for local radio advertising revenues in the market?
· How carefully did Ofcom scrutinise the application by The Local Radio Company, before awarding it the licence, in order to separate the ‘spin’ from the reality?
· Did Ofcom monitor and assess the Durham station to ensure that the promises made in its licence application were executed on the ground?
· Why is a ‘promise’ explicitly made in a radio licence application not a contractual promise? Or are the proposals promised in an application simply disregarded by Ofcom once an applicant has been awarded the licence?

The local station in Durham must have failed because either/and:
· It was licensed to fail – no commercial radio station could survive in too small and too poor a local market – in which case Ofcom should never have advertised the Durham licence
· The Local Radio Company did not paint a truthful picture in its licence application of the economics of opening a Durham station, and Ofcom did not critique it sufficiently
· The Local Radio Company’s execution of its business plan for the Durham radio station was badly flawed

In any of these cases, somebody needs to put up their hand and simply admit ‘we got it wrong’. What galls is that both The Local Radio Company and Ofcom appear to have almost connived to come up with a ridiculous new storyline – Durham is a lot closer to Darlington than we realised – which simply contradicts everything that had been said previously, but conveniently glosses over any notion that the present predicament was the result of poor judgement.

To be fair to The Local Radio Company, its latest submission to Ofcom did reiterate:
The present proposal to simply add two further hours of daily weekday sharing is made in the light of the difficult financial situation facing all stations such as these. Relevant financial information has been supplied to Ofcom in confidence.

It might engender much more respect for the parties if, instead of these economic vagaries cloaked in confidentiality, the application to Ofcom to request deconstruction of the Durham station had simply said:
We screwed up as a station owner, you screwed up too as a regulator, and all we can do now is the two of us try and salvage the situation to ensure that the citizens of Durham can at least retain the shell of a local radio service, even if not the substance. Between us, we recognise that all we have done is add insult to injury, repeating the BBC’s unwarranted removal of a local radio service for Durham in 1973. Our sincere apologies to the people of Durham. All we can hope is that, by both of us learning from our mistakes, this travesty will not be repeated either for a third time here in Durham or elsewhere.


What Northeast England now has in the enlarged ‘Alpha’ is the makings of yet another regional radio station that could (if Sun FM were included) cover the huge area stretching from Tyneside down to Yorkshire. It would then become the fifth regional station in the area, adding to Galaxy, Smooth, Magic and Real. As for genuinely local radio serving the Durham area, The Local Radio Company’s licence application already demonstrated very clearly that neither Metro Radio nor TFM cover Durham editorially. This leaves Durham, whose population seriously lacks economic mobility, back out in the local radio wilderness once again. If that isn’t public policy failure, then what is?

Durham must be unique in Britain in that it once had its own local radio station and then had it taken away. ….

Once is an accident, twice is a ……..?

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.

Digital Radio Switchover: Parliamentary Question

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DAB radio in Germany: further public funding rejected

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

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

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

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

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

Digital Radio Upgrade: everyone's a winner?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Q&A session [excerpts]:

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

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

[Existing DAB coverage is not good enough?]

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

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

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


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

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

Digital radio switchover: the Conservative Party viewpoint

Jeremy Hunt, Shadow Culture Secretary, speaking on The Guardian’s Media Talk podcast:

We support the idea of [digital radio] switchover. We have more concerns about [FM] switchoff. There are 120m analogue radio sets and, if we were to tell consumers that, after 2015, those are going to be useless and you have got to chuck them away, people would I think be very angry. And so there’s a lot of work that needs to be done before we can even think about switchoff.

[What sort of incentives do you think you could give to the public to be attracted to digital radio?]

I think the most important thing is not something the government can do, but something the industry can do, which is to develop new services on digital platforms that actually mean there is a real consumer benefit to DAB. At the moment, the benefits are marginal. I mean, there are some benefits in terms of quality, but your batteries get used up a lot more quickly, the reception is a lot more flaky, and a lot of the things that make digital switchover attractive on TV don’t apply to radio in the same way. So I think the industry needs to do a lot more to make it in consumers’ interests to have that switchover. That’s one thing. I think what the government can do, though, is work much more closely with car manufacturers. The French government has bitten the bullet on this. I think we should do a lot more.

[The French government has mandated car manufacturers to put digital radios in cars. Should the British government follow suit?]

Given the French government has done that, there may be no marginal cost to car manufactures were the British government to say the same thing. But, at the very least, we should be looking at incentives to encourage car manufacturers to standardise on DAB because, until you do that, we are not going to get the network to the 97% or 98% coverage that we really need.

[What about all those old [radio] sets? You raised it in your speech here at the Radio Festival – old analogue sets that could become obsolete.]

Well, exactly, and there is an environmental consideration with that as well, because I think people would be very very concerned at the environmental cost of having to get rid of 120m sets. So I think we have got to think about that. We have also got to think about consumer anger. Consumers are people that the radio sector needs. It’s going through a very tough patch. We don’t want to switch off listeners by suddenly saying that we are not going to – that we are going to force you to have a new radio, and there’s a real danger, if we do that, that they might start listening to their iPods and their CD players instead.

[You mentioned a possible swap scheme. How would that work? You take your old analogue radio into Currys and Dixons and get a shiny new digital one?]

Yes, I think this is something that I don’t think is really for the government to do. But I’m just really putting it on the table. I think it’s the kind of thing the industry might think about. If you could swap your analogue radio for a digital one, people might think ‘wow, there’s a benefit to switchover’. At the moment, we seem to be getting into this mindset where we want to force it on the public, even though the public can’t really see what the benefits are.