Friday, 24 July 2009

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concluded: “The DAB system is obsolete in Spain and we have conveyed to the authorities that it is a road to nowhere”.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”.

Wednesday, 22 July 2009

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

Sunday, 19 July 2009

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.”

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.

Thursday, 9 July 2009

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.

Sunday, 5 July 2009

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.

Friday, 3 July 2009

DAB radio switchover: BBC listener opinions offer exit strategy

The BBC is in a tight corner over DAB. It played a significant role in developing the technology in the 1980s, in experimenting with the earliest DAB transmissions in the UK in the 1990s, and in launching a portfolio of exclusively digital radio stations in the 2000s. During that long period, management teams within the Corporation have come and gone, yet the commitment to DAB as a future technology to replace FM/AM analogue radio has remained resolute. Until now.

Realism eventually rears its ugly head, even in the BBC. And a changing of the guard at the top of the BBC radio division offers a timely opportunity to re-evaluate a strategy for DAB that must have been first decided almost two decades earlier. Across the meeting room conference table, the question is eventually asked by the newcomer – exactly why did we decide to commit so much time and so much money to DAB in the first place? The answers are many and various and have inevitably become muddled over time. The one thing that is certain is that nobody in the BBC could have believed back in the 1980s that we would still be arguing in 2009 as to whether implementation of DAB radio technology is worth the effort. Back then, the bright digital radio future looked attainable within a matter of years, rather than decades. How wrong they were.

The longer you have peddled away, the harder it is to stop and get off the bicycle. Having thrown decades of resources at DAB technology, it would be almost impossible for the BBC to say ‘whoops, it didn’t quite work out so we’ll stop now’. The ire from DAB radio receiver purchasers, the backlash from Licence Fee payers, and the possibility of an incoming Tory government potentially using it as a stick with which to beat the Corporation for wasting money are all too horrible to consider.

So it was interesting to hear Tim Davie, Director of BBC Audio & Music since September 2008, on BBC Radio 4’s ‘
Feedback’ programme, ingeniously beavering away at building a potential DAB exit strategy by invoking the will of the listener. As everyone working in BBC radio understands, its listeners are extremely resistant to change – almost however minor it is – and are not afraid to voice their opinions in the media at the slightest inconvenience. It was therefore appropriate that the ‘Feedback’ programme itself should be used to suggest that, if BBC listeners did not want to change over completely to DAB radio, then the BBC might decide it should not happen. Tim Davie said:

“We support the idea of switchover to digital. In terms of the switchover date, our position has always been that 2015 is ambitious. We think that the listeners need to be reassured that coverage levels, quality levels are at a point where switchover is realistic. So we are totally focused on delivering a position where we have hit certain thresholds, we know that we are in a place where switchover can happen without widespread disruption.”

[Are you going to make that judgement yourself or are you going to consult your listeners, many of whom dispute claims that are made by BBC spokesmen about the quality of reception and other things. Have you any plans to consult the audience about whether the time has come when switchover is possible?]

“Absolutely. We are talking to government now about how consultation should take place. From a BBC perspective, whether it be ‘Feedback’ or our constant audience research, the idea that we would move to formally engaging switchover without talking to listeners, getting listener satisfaction numbers, all the various things we do, would be not our plan in any way. We would be – we are – in dialogue now for the next six years.”

[But consultation implies the possibility of changing policy, and a lot of our listeners are sceptical ….]

“I think we are pretty committed to digital. Having said that, since I have arrived at the BBC, I certainly haven’t seen it as inevitable that we move to DAB. We do believe that, if radio doesn’t have a digital broadcast platform, it will be disadvantaged. I’m pretty convinced of that logic. What I’m not saying is that we have to move at 2015 if we haven’t delivered the thresholds – the right levels of listening to digital radio and to DAB. I don’t think we are on a course that is unstoppable to 2015 although we are pretty committed to a DAB switchover over time.” [emphasis added]

[Do you accept, at the moment, that DAB is often inferior to the existing [FM] sound?]

“DAB doesn’t have the coverage of FM at this point, and it’s really straightforward that the quality of your audio is related to how close you are to a transmitter. So, DAB currently has less transmitters. So those people who are further away from a transmitter aren’t getting as good sound. One of the things I’ve been very clear on in my position is – we will not even entertain a switchover unless the level of quality coverage is at 98%, which is in line with FM. So we, as the BBC have said, without the extra 600 transmitters that we would need to put in place, DAB switchover will not be a reality.”

In terms of BBC public pronouncements, these viewpoints on DAB are revolutionary. Under Tim’s predecessor, Jenny Abramsky, public dissention about the DAB future was simply not permitted. Last year, after I had been interviewed for an item on Radio 4’s ‘Today’ programme about the problems facing switchover to DAB, I never again heard a similar item about DAB on the show. Asked about the BBC’s commitment to DAB at conferences, BBC staffers would look sheepish and admit they had been told to make no comments.

What a difference a year makes. The last ten days have witnessed a blizzard of managed dissent on BBC radio. The ‘Today’ programme yesterday morning ran a substantial piece in the important pre-0830 slot that was very critical about the pitfalls of DAB reception in cars. This week’s ‘
Media Show’ on Radio 4 devoted considerable time to the DAB issue. Last week’s ‘You & Yours’ on Radio 4 discussed listeners’ issues with DAB in gory detail. And the weekend’s ‘Feedback’ has opened up the possibility of BBC listener revolt on DAB translating into a policy change.

It feels almost as if a subtle marketing campaign is now going on from within the BBC as a response to the radio proposals in the Digital Britain report, softening up the outside world for the BBC to be able to downgrade/dump DAB at some future time. Of course, Tim is a clever marketer from the real world (Pepsi, P&G), whereas his predecessor was a (very successful) career BBC apparatchik. What we might be seeing is the opening salvo of an action folder marked ‘Possible DAB Downgrade/Exit Strategy’. The nuclear button might never have to be pressed, but it’s always useful to know where the exit doors are and how you are going to reach them, however little you might want to think about the DAB plane going down in flames.

Thursday, 2 July 2009

Funding DAB radio improvements: who pays?

At the Radio Festival in Nottingham, the final session on Wednesday 1 July 2009 @ 1215 was a discussion about the future of UK radio that was broadcast live on BBC Radio 4’s Media Show and hosted by Steve Hewlett. Part of the discussion was about DAB in the UK following the publication last month of the Digital Britain report.

Amongst its range of proposals, Digital Britain had recommended:
· “at a national level, we will look to the BBC to begin an aggressive roll-out of its [DAB] national multiplex to ensure its national digital radio services achieve coverage comparable to FM by the end of 2014”
· “where possible, the BBC and national commercial multiplex operator should work together to ensure that any new transmitters benefit both BBC and commercial multiplexes”
· “further investment is required if local DAB is ever to compare with existing local FM coverage”

How will this improved DAB infrastructure be paid for? Digital Britain had suggested:
· in some geographical areas, “the BBC will need to bear a significant portion of the costs”
· “however, the full cost cannot be left to the BBC alone”
· “some [commercial radio] cost-savings must support future [DAB] transmitter investment by the local multiplex providers”
· “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies”

Interviewed about these issues for the Media Show were:
Tim Davie, Director of Audio & Music, BBC [TD]
Phil Riley, former Chief Executive, Chrysalis Radio [PR]

[Tim, where is this money coming from?]

TD: The truth is that I can’t say I can find it. What I have been saying very clearly is that I can make a case for it. And, where the money comes, or could come, from I think is pretty well articulated in public debate, which is… We have been spending money against broader digital distribution projects – the digital television switchover – and where we spend the Licence Fee beyond content, it’s this thing called the ring fenced fund where we’ve been investing in digital television switchover. Now, as the radio guy, it’s saying ‘we have a case for this medium’. We love radio. We think there’s a really good case for it being there as an investment ….

[This investment has got to happen pretty quickly to stand any chance of getting us to the 2015 date which the government have set us as their target for switching from analogue to DAB. That means quite a lot of things have got to happen by 2013. That’s into the next Licence Fee settlement. So you need to find £100m for your 600 extra [DAB] transmitters, or whatever it is, in this settlement. Have you got it?]

TD: Well, we have said that we don’t think – and we’re yet to see what that looks like because we haven’t done TV switchover that ….

[Have you got the money? You have to start spending now, you can’t leave it because [otherwise] you’re never going to get there, are you?]

TD: We’ve said that as part of Digital Britain – it’s all in the report – it says that in the course of the next 12 months, even if we wanted to spend money at this point, we don’t quite know what we are spending it on. Without getting too technical, if you look at the ….

[On ‘Feedback’, you’ve said 600 transmitters are needed to get to an equivalent coverage of FM and you said the BBC wouldn’t go there unless coverage was roughly equivalent to FM.]

TD: Specifically, the minority of money is those 600 transmitters that gets you on the national multiplex, which is what the big stations like Radio 4 go on, that gets you to 98% cover. The bigger money is in sorting out the regional and local stations which are a bit of a patchwork and that investment – the numbers are loose because we are going to be doing some detailed planning with the commercial sector on ….

[Very briefly, a one-word answer. Do you have any money set aside now to spend on this purpose?]

TD: No.

[Splendid.]

………………………..

[Does commercial radio have any money to spend on this proposal?]

PR: If you read the Digital Britain report in its totality, there are a number of proposals for changing the way commercial radio operates, in terms of co-location and regional licences becoming national networks. Now, bringing all of that together as a piece, will that free up sufficient additional funds for the commercial sector to be able to roll out more digital? I don’t know. You’ll have to ask the other commercial players.

[What’s your guess?]

PR: ‘No’ is the answer at the moment.

[Because one of the issues with DAB surely is that the commercial side of the equation has already, in commercial terms, failed. Increased costs, but no increased revenues. Not even Channel 4 was able to galvanise it to make it change. Is there a commercial model in DAB at all, do you think?]

PR: I think DAB is a terrific platform. The die has been cast. 9 million sets, 20% of all listening. DAB is here to stay. So, we can’t go back to not having DAB so actually we’ve got to go forward and we’ve got to go forward with as sufficient a pace as we can. My concern would be trying to go forward too fast and falling over ourselves.

[The government has said they want to do this in 2015. They have said that by 2013 they won’t press the button to switch off [FM] until …. They will give 2 years’ notice. So, by 2013, I think they want 50% of listening to be on DAB, and 90%+ coverage of DAB across the country. Is that timetable in any way realistic? The BBC say they have no money set aside just now. You say that you don’t. How’s it going to happen?]

PR: I think Tim famously used the euphemism ‘ambitious’ yesterday and I think ‘ambitious’ is the right word for it. Personally, I can’t see us getting to 2013 although, to be fair to the Digital Britain report, it says it will test it every year from 2013 and when we get there, then we will move on to Phase Two.

[Tim, lots and lots of listeners have contacted this programme and other programmes whenever they have been asked and are very very worried about this. They think they might have 3, 4, 5, 10 – 15 in one case – analogue radio sets and they have been asked to go through all the rigmarole of changing them and ‘what for?’ is the question they ask. ‘Why are you asking me to do this? It’s not broke, don’t fix it’.]

TD: If you look at the industry as a whole, you could argue that we are not ready for the future. Actually, although we have some fantastic services on-air now, we have just talked about commercial radio - their financial model looks pretty broken at this point.

[Isn’t the key question ‘content’?]

TD: I think the case to the listener is really clear, which is – digital radio can present a much wider range of national stations, it can offer functional benefits. We’ve seen what that can bring in something like television. There is a real challenge for the industry to step up to the plate and deliver that content, and that has to happen. And, to be very clear, I am very worried, like the listeners, that if you have all these old [analogue radio] sets and there is no benefit, we should not be moving. What’s happened in the last few weeks though, and months, is that the radio industry as a whole has said ‘we’re going to go for DAB and we’re going to try the transition to digital’. We haven’t said that it is actually happening until we’ve earnt that, which will be at a threshold level.

Wednesday, 1 July 2009

DAB radio in cars by 2013? - "extremely challenging" say car makers

The UK association of car makers, the Society of Motor Manufacturers and Traders [SMMT], has cautiously welcomed the Digital Britain report but has expressed “reservations about the ambitious timetable” to ensure that DAB radios are available in all new cars by 2013. It has also expressed concern about the 32 million vehicles already on the road, of which it says “only a small percentage” already have DAB radios fitted, noting that the timetable to fit them with “aftermarket devices” is “extremely challenging”.

SMMT has emphasised that the government’s ambition to accelerate the take-up of DAB radio will be “contingent on all national and commercial broadcasters investing in content”. Its Chief Executive Paul Everitt said: “The long-term challenge will be for the broadcasters to invest in content and coverage to create demand for these [DAB radio] products to be provided as standard”. The commercial radio industry has yet to make explicit statements, in the wake of the Digital Britain report, as to how it plans to enhance its exclusive digital radio content to accelerate consumer interest in the platform, or how it plans to finance the build-out of necessary DAB infrastructure upgrades to improve UK coverage.

The Digital Britain
report had set out a five-point plan to encourage take-up of DAB radio receivers in cars:
· to work with car manufacturers so that vehicles sold with a DAB radio are available by the end of 2013
· to support a common logo for DAB car radios
· to encourage the development of portable analogue-to-digital radio converters
· to promote the introduction of more sophisticated traffic information within DAB broadcasts
· to work with European partners to develop a common European approach to DAB radio in cars

The last of these points has already received a setback, following the
decision last week of commercial radio in Germany and Switzerland not to commit investment to the development of DAB as a replacement platform for their existing FM/AM services. An announcement from Austria is anticipated soon.

Asked about the DAB situation with cars, Tony Moretta, Chief Executive of the Digital Radio Development Bureau [DRDB], the agency charged with marketing DAB in the UK, had
said on BBC Radio 4’s ‘You & Yours’ show last week:

“One of the things that has held back the car industry slightly with DAB in the UK is that the UK has been ahead of the rest of the world in going to digital radio. Now if you’re a mainstream car manufacturer, you want to be able to manufacture a car with a radio that will work all around Europe. It’s only been relatively recently that you’ve seen France and Germany and other countries commit fully to digital radio. And so the car manufacturers now have a common standard they can build a radio into their car and it can work across the whole of Europe. So you’re starting to see a big change now. Most car manufacturers now offer DAB as standard in a car or as a factory-fitted option starting for as little as £55. So that’s for new cars, and we saw the other day Ford and Vauxhall announce their support for Digital Britain’s recommendations. What we are going to have to do is look at adapting those cars that haven’t been changed by that point.”

The DRDB has cited the more enthusiastic Ford and Vauxhall responses to Lord Carter’s Digital Britain report, but has not yet mentioned the considerably more “cautious” SMMT response. It should be noted that Ford has been a long time minority shareholder in the MXR regional DAB multiplexes, and thus would benefit financially from improved uptake of the DAB platform in the UK, whether in-car or otherwise.

In-car DAB radios are still a rarity in the UK:
· Out of 2.4m new vehicles registered in the UK in 2007, only 20,000 buyers chose to install a DAB radio
· Out of 34m cars on the road in the UK in 2007, it is estimated that between 170,000 to 200,000 had DAB radios fitted.