Saturday, 11 July 2009

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.

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