Government: agreement to finance DAB radio upgrade “not expected until late 2010”

Recent government correspondence (see below) has confirmed that:
• DAB upgrade is “unlikely to be an easy task”
• DAB upgrade is unlikely “to be resolved quickly”
• DAB upgrade requires agreement about the current levels of FM coverage
• DAB upgrade requires agreement of a plan for building out DAB
• DAB upgrade still requires agreement on the level of investment required
• the government “hopes to have a comprehensive plan by the end of 2010”
• the DAB upgrade funding issue still has to be agreed between the BBC and the commercial radio sector, which is not expected until late 2010.


House of Lords
Delegated Powers & Regulatory Reform Committee
Second Report of Session 2009-10 [excerpt]
re: Digital Economy Bill
17 December 2009

Clause 36
20. Section 58 of the Broadcasting Act 1996 makes provision for the duration and renewal of national and local radio multiplex licences, and in particular specifies the grounds on which an application may be refused. Section 58 is in Part 2 of the 1996 Act.
21. Clause 36 inserts a new section 58A into the 1996 Act enabling the Secretary of State by regulations subject to affirmative procedure to “amend section 58 and make further provision about the renewal of radio multiplex licences” and for that purpose to amend other provisions of Part 2 of the 1996 Act. There is a “sunset” provision preventing the power being exercised after 31 December 2015.
22. It is impossible to tell from the Bill whether the policy is that the licences should or should not be renewable at all, let alone for what period or on what grounds. Indeed, paragraph 56 of the memorandum candidly admits that the relevant policy decision has yet to be made. We draw attention to the skeletal nature of the power in clause 36, to enable the House to examine it further and determine whether it is justifiable in this context.

Attached is the Memorandum by the Department for Culture, Media and Sport and the Department for Business, Innovation and Skills which explained:

Clause 36: Renewal of radio multiplex licences: Amendment of Broadcasting Act 1996
Powers conferred on: Secretary of State
Power exercised by: Regulations
Parliamentary procedure: Affirmative resolution

Clause 36 adds a new section 58A into the Broadcasting Act 1996. That provision contains a power to amend Part 2 of the Broadcasting Act 1996 (and in particular section 58) by regulations for the purpose of making further provision about the renewal of radio multiplex licences. In particular, regulations made under this power may make provision about the circumstances in which OFCOM may renew a licence, the period of such renewal, the information that OFCOM may require from an applicant, the requirements that an applicant must meet, the grounds for refusal of an application, payments to be made and further conditions that may be included in a renewed licence.
The reason for providing for a power to amend Part 2 of the Broadcasting Act 1996 by order in this way, rather than making amendments in the Bill, is that the decisions about whether or not to extend radio multiplex licences are dependent on an agreed industry wide plan for rolling-out DAB to match FM coverage. This planning process can only begin when (a) OFCOM have the power to allow multiplexes to merge, which requires the new powers to change the frequencies allocated to multiplexes set out elsewhere in the Digital Economy Bill, and (b) when funding issues between the BBC and the commercial sector are agreed; which is not expected until late next year. The power conferred on the Secretary of State will be subject to a sunset provision, so that it cannot be exercised after 31 December 2015.
Given that the power provides for amendment of primary legislation relating to the regime for renewals of licences, we consider it appropriate that any order made under this power should be subject to the affirmative procedure.


Letter from the Rt Hon Lord Mandelson, Secretary of State, Department for Business, Innovation and Skills to the Chairman of the Delegated Powers & Regulatory Reform Committee [excerpts]
January 2010

1. I am writing in response to the Committee's Second Report of Session 2009-10 published on 17 December which addresses the Digital Economy Bill…….

Independent radio services
Report paragraph 22: clause 36: Renewal of radio multiplex licences

22. The Committee considers that it is impossible from the Bill to determine whether the policy is for licences to be renewable and, if so, for what period and on what grounds. The Committee draws attention to the "skeletal nature of the power in clause 36, to enable the House to examine it further and determine whether it is justifiable in this context".
23. The Department notes that the Committee does not recommend removal or amendment of this provision. The Government intends to further explain the rationale for the clause during the Committee stage of the Bill.
24. It is the Government's aim to work with broadcasters and multiplex operators to agree how to build out the Digital Audio Broadcasting (DAB) infrastructure to meet FM coverage levels, one of the criterium that needs to be met in setting a date for digital switchover for radio. This is unlikely to be an easy task, or indeed to be resolved quickly. Among other things, it will require agreement about the current levels of FM coverage, the plan for building out DAB and the level of investment required. The Government hopes to have a comprehensive plan by the end of 2010.
25. The Government believes that a key component of this planning will be the ability to alter the terms of multiplex licence renewals. The existing section 58 of the Broadcasting Act 1996 allows OFCOM to renew radio multiplex licences granted prior to 30 September 2006 for periods of 12 or 8 years (depending on when the licence was granted). However, the Government recognises the need to reduce, as much as possible, the impact of infrastructure build-out on digital stations.
26. One way this can be achieved is to allow multiplex operators to spread the cost of any new investment over a longer licence period. This is why the Government has proposed new powers in section 58A to amend the provisions about the renewal of multiplex licences. The reason that the power is not more specific is because it will not be clear exactly how it will be most appropriately applied until the plan for the build-out of DAB is developed.
27. Exercise of the power will, in any event, be subject to parliamentary scrutiny due to the fact that any regulations will require resolutions of both Houses before being made.