DAB radio receiver sales
“Ford Ennals, Digital Radio UK’s chief executive, remains optimistic and says that the DAB [receiver] market will grow by 8-10% this year [2011].” [source]
FACTS: DAB/digital radio receiver sales volumes in 2010 were down on 2009, and in 2009 were down on 2008, although stakeholders disagree about the precise volumes and the percentage change:
• “2010 was slightly down in digital radio sales volumes (-2.3%) compared to 2009” [Digital Radio UK update]
• “’[DAB] volume sales were only marginally lower than the previous year (-0.7%) at 1.92 million units,’ explains Simon Foy, GfK senior account manager, CE.” [source]
• “DAB sales for 2010 were 1.91 million pieces” [source]
Digital radio listening reaching the 50% criterion
Ford Ennals: “I think you can see the listening criteria’s certainly being met in the next five years.” [WMF]
“Despite two thirds of listeners still using analogue radio, Ennals believes that, if you extrapolate digital radio’s recent growth pattern, the 50% target could be achieved by the end of 2014.” [source]
Ford Ennals: “We are likely to hit 50%, you know, in the next five years, I would say.” [DRS]
FACTS: When you extrapolate the radio industry’s RAJAR dataset, the 50% criterion is reached:
• Not by the government’s target of year-end 2013
• Not by Ford Ennals’ new, seemingly variable, targets of “the end of 2014” or “in the next five years”
• By year-end 2018, IF growth in digital listening is maintained at the current rate
Growth in DAB/digital radio listening
Ford Ennals: “We've seen overall in this year, in the last 12 months, each quarter, we've seen a 20% year-on-year growth of digital listening.” [WMF]
Ford Ennals: “We’ve seen 19 to 20 per cent listening growth in the year [2010].” [DRS]
Ford Ennals: “We see about 20% growth in 19 ... sorry, in 2010, it was 14% growth in 2009 and there was about 10% growth the previous year. So, you know, we see solid growth.” [WMF]
FACTS: According to the radio industry’s RAJAR dataset:
• 20%+ growth in digital listening was only evident in the last two quarters of 2010, not in “each quarter”
• Part of this apparent growth spurt in digital listening was the result of a sudden 5% to 6% increase in TOTAL radio listening recorded in the last two quarters of 2010
Consumer satisfaction with analogue radio
“DRUK’s Ennals is not convinced by the argument that most consumers are more than satisfied with analogue radio.” [source]
Ford Ennals: “FM is full and I think almost half of the FM spectrum is taken by 5 national services, there's only 1 national commercial service, so it's, you know, in terms of the ability to give consumers more choice, it is somewhat limited …” [WMF]
FACTS: Ofcom research has consistently demonstrated the high level of consumer satisfaction with existing radio services:
• Around 90% of consumers were ‘satisfied’ with the choice of radio stations in their area in 2006, 2007, 2008 and 2009
The 2015 digital radio switchover date
Ford Ennals: “I'm confident [digital radio switchover] is going to happen in the near future but I don't think there's a need to have a date and certainly we won't be communicating a date.” [WMF]
FACTS: Ennals and Digital Radio UK have been busy “communicating a date” for digital radio switchover to anyone who would listen. Just a few of many examples:
• Ford Ennals: “We are confident digital listening can reach 50 per cent by 2013.” [source]
• Ford Ennals: “We have set a course to double listening and expand coverage by 2013, and to switchover by the end of 2015." [source]
• Ennals stressed that a target date of 2015 was “challenging but achievable” [source]
• “Ford Ennals CEO of Digital Radio UK had positive comments for the 2015 switchover date set by government and told guests to Radio Festival that plans were already in motion to meet the ambitious date.” [source]
• Ford Ennals: “The radio industry believes that these two criteria can be met at the end of 2013, for a proposed switchover to take place in 2015.” [source]
• “2015 is ‘achievable’ for an analogue-to-digital switchover, according to industry body Digital Radio UK.” [source]
[sources: WMF = Westminster Media Forum, 11 April 2011; DRS = Digital Radio Stakeholders, 3 February 2011] [thanks to Darryl Pomicter]
What would have to be done to make DAB radio successful?
“What there does need to be, as Freeview and digital satellite has shown in television, is simply a sufficient combination of services, technology, simplicity and price or discount to provide a value proposition for the consumer,” suggested Stephen Carter in 2004, when he was chief executive of Ofcom.
“….. for the consumer” were the key words. They were also the words that became forgotten. The consumer was ignored in the radio industry’s pursuit of the radio industry’s own agenda for DAB radio. As a consequence, DAB radio has still not succeeded … with consumers. The failings were acknowledged by Quentin Howard, one of the architects of DAB radio in the UK:
“The mistake by broadcasters was in not understanding that ‘build it and they will come’ is no longer practical in this integrated technological age.”
Which?, the UK consumer advocacy, noted the radio industry’s lack of attention to the consumer in a February 2011 briefing paper entitled ‘Digital Radio Switchover in 2015? Consumer Led Or Not At All’:
“The transition to digital radio is currently industry led. The benefits of a transition to digital radio over the current analogue service are not clear to consumers, and the uptake of the technology over the past 10 years reflects this.”
Which? suggested that, before the government can announce a date for digital radio switchover, the following criteria should be met:
• “Uptake should be a minimum of 70% of all FM radio listening transferred to digital, leaving 30% still listening on analogue (FM/LW/MW/SW) (the Government’s Digital Radio Action Plan suggests 50%)
• The transition to digital must not be announced until coverage, including a measure of signal quality, is better than that of FM radio
• DAB must have been fitted as standard in all new cars for at least two years and an effective and affordable solution to in-car conversion must be available prior to the announcement of a switchover (which costs no more than for in-home conversion)
• Government must conduct a full cost-benefit analysis from a consumer perspective as a priority because increasing consumer desire for DAB should not focus on cost alone
• Minimum standards associated with a kite mark must be ambitious and future-proofed and any incentive scheme to switch to DAB should offer only kite marked receivers
• Consumer group representatives must be involved in the development of an information campaign independent from industry to raise awareness of the digital switchover by consumers and ensure guidance and training tools are available to retailers. In this regard, any lessons from the Digital TV switchover should be acted upon
• In its assessment of the environmental impact of a switchover to digital radio, the Government must tackle the full range of issues around recycling of analogue sets and the energy impacts of DAB”
However, in some of these areas of concern, current policy on DAB radio appears to be moving in the opposite direction to that advocated by Which?:
• The 50% criterion (50% of radio listening via digital platforms before switchover can be announced) is not mandatory because it was never included in the Digital Economy Act [see Jan 2010 blog]
• The latest plan for DAB is not to deliver reception even as good as FM, but to make it worse than FM [see recent blog]
• Only 1% of cars have DAB radios fitted and future take-up will inevitably be slow [see recent blog]
• Roberts Radio reported a 35-40% customer return rate for its in-car DAB radio adaptors [see Nov 2010 blog]
• The cost benefit analysis of DAB radio to be considered by the government will also be authored by the government, rather than commissioned independently [see Jan 2011 blog]
• Roberts Radio admitted having had to pull the plug on several DAB receiver projects, including the industry’s promised ‘£25 DAB radio’, because they could not meet Roberts’ minimum quality standards
In July 2010, after the formation of the new coalition government, culture minister Ed Vaizey had said:
“If, and it is a big if, the consumer is ready, we will support a 2015 switchover date. But, as I have already said, it is the consumer, through their listening habits and purchasing decisions, who will ultimately determine the case for switchover.” [see Sep 2010 blog]
So, it might appear that the Minister and Which? are, in fact, both lined up in agreement that digital radio switchover can only happen if it is supported by consumers. So why has the government not yet recognised that consumers already seem to have given the thumbs down to DAB?
Because there are middle men (Ofcom, DCMS, Digital Radio UK, Arqiva, DAB multiplex licence owners) who persist in keeping the DAB dream alive in Whitehall. Yet again, consumers are being drowned out by the clamour of agencies eager to pursue their own narrow objectives. And the mantra of the middle men is: DAB crisis, what crisis?
When something works well, it just works. You do not need to analyse why it works. It just works. And nobody asks questions as to why or how. That is the case with FM radio. During half a century of development, more and more FM transmitters have been built across the UK (2,100 currently in operation) so as to reach the point now where almost the entire population receives an FM signal (maybe not always perfect, but some reception rather than none at all).
DAB radio was intended to replace FM radio. However, it must only be worth replacing FM with DAB if DAB is actually better than FM. Why replace a transmission system that has taken 50 years to perfect with something that is going to be worse? Unfortunately, nobody thought to conduct a cost/benefit analysis during the last two decades to determine what the cost would be of making DAB radio reception as good as FM radio, let alone better. As a result, DAB radio was foisted upon the public in 1999 without a roadmap to ensure that reception was even as good as FM radio for consumers.
Twelve years later, DAB reception remains worse than FM reception in many places, or is non-existent. Whereas poor FM reception gives the consumer a poor quality listening experience, poor DAB reception provides no listening experience whatsoever. With DAB, a poor signal is the same as no signal.
Instead of Ofcom valiantly admitting defeat over DAB radio – which might infer that the regulator and its predecessor, the Radio Authority, had screwed up the implementation of DAB in the UK – Ofcom presses ahead with increasingly desperate attempts to try and salvage this technological and regulatory disaster.
Ofcom’s latest ‘project’ is to try and understand why FM radio, more than half a century after its introduction, gives consumers acceptable radio reception. Intrinsically, the work is redundant. If FM works well, why bother to analyse why it works? The answer is: because DAB radio does not work. In order to make DAB work, an understanding is deemed necessary of why the system it was intended to replace – FM radio – does work.
Belatedly, it has been understood by the bureaucrats that the expense of making DAB as good as FM will prove too costly. It requires too many DAB transmitters, too many DAB power increases, at too great a cost for the radio industry. Might this not be a good time for them to back away from the notion of DAB radio REPLACING FM radio because it is simply too costly, even just to make it AS GOOD?
Not for the bureaucrats involved. Instead, the philosophy within Ofcom and the government is a new plan to deliberately make DAB radio NOT AS GOOD as FM radio. But still to persuade consumers that DAB is intended to replace FM radio for national and large local radio stations. Madness? Yes. Self-defeating? Yes. Contempt for radio listeners? Totally.
Peter Davies, who is responsible for radio at Ofcom, explained part of this 1984-style philosophy to replace ‘good’ FM with ‘worse’ DAB to the Digital Radio Stakeholders Group meeting in the calmest of tones on 3 February 2011. Although his presentation is lengthy, I have included Davies’ words in full below so that you too can try and decipher the logic of a solution for DAB radio that is purposefully sub-par.
Perhaps the Digital Radio UK marketing slogan next winter will be: 'Buy a DAB radio! Worse reception than FM guaranteed. But better than no radio at all.'
Peter Davies, Ofcom: “The Coverage Planning Working Group is chaired by Ofcom, but we have effectively two groups that are feeding into this. There is the actual Working Group that is doing all the sort of hard grind of doing the planning work, and that consists of Ofcom, Arqiva and the BBC. There is also a Planning Advisory Group which consists of all the [DAB] multiplex operators, with Digital Radio UK and RadioCentre as well. So what I’m going to run you through this afternoon, quite quickly because of the time, is just what we’re doing in terms of FM. What is it we are trying to match? Secondly, how you then do that with DAB. Thirdly, looking at what we need to do to the frequency plan in the UK to achieve that. And then just onto the next steps.
So, FM coverage. I should say we are doing this for national services as well as local. So it’s both BBC and commercial national services, as well as the local. But I’m going to focus this afternoon on the local because that’s, in a way, where some of the more difficult issues are. This is a map of Manchester. I know you won’t be able to see the detail on that, but it gives you an impression, at least. So what we’ve done in each part – in fact, in the whole country – is define a set of ‘editorial areas.’ So that’s shown on this map by that dotted line – you can see around the edge, a sort of dark purple dotted line – so that everywhere in the country is covered by one or more areas – there are some overlaps – but at least everywhere is covered by one area. So the editorial areas are areas that have been agreed by the BBC and by the [DAB] multiplex operator and commercial radio operators as being the sort of area that they would, in an ideal world, like to cover. It’s also based on [DAB] multiplex areas, so it’s a bit of a compromise.
So, if you look at the actual coverage of BBC Radio Manchester [GMR] within this, that’s shown in the sort of standard way of measuring – 54 db – is shown in green but, actually, editorially BBC Radio Manchester would like to cover the bits within the dotted line. So there is coverage beyond the editorial area where people can pick up the service, but it’s not really intended for them. And, equally, there are bits within the existing editorial area which aren’t covered terribly well on FM but which, nevertheless, the station would like to think it serves.
In terms of the actual [FM] coverage, it’s been quite difficult to determine what that is. The ‘54db’ is the standard internationally agreed planning measure. So that’s 54db per μv per metre, but I’m not an engineer so don’t ask me any more detail than that. But it’s a definition that was drawn up back in the 1950s and is really about reception 10m above the ground, using a rooftop aerial and it sort of tells you whether you can get a signal on your radiogram, which is not terribly useful [now]. So we know that people use radios in very different ways, but we sort of know that this works, but it has never actually been tested. So it’s a planning definition, which is very old and slightly messy.
So what we’ve been doing as part of this work is drawing up what’s known as a ‘link budget ‘, which is effectively taking the signal strength as it leaves the transmitter and then adjusting it all the way along until it actually gets to the receiver. So, in other words, you adjust it because it’s a distance from the transmitter going over some hilly ground, going down into buildings, loss within the receiver itself and so on. So that you can work out what signal strength you will need to work to get decent FM coverage. So we’ve looked at three different strengths because we know that the 54db is probably a little bit conservative, so we also looked at 48db and 42db, again because conditions vary between what you can receive on a portable kitchen radio and what you can get in your car. We are also looking at coverage not only of households, but also of major roads as well, so it’s not just an indoor measurement we’re looking at.
What we have seen so far is actually that the link budget we have developed is that these numbers are probably about right. So 42db is probably about right for cars. But you can see that there’s not actually very much yellow on that map, so that most places either get a good solid indoor signal, or the signal’s not good at all, basically. So, for each area, we have looked at both the BBC local service – so that’s BBC Manchester – and also the commercial coverage, and we’ve taken the largest commercial station in each area. So, for Manchester, this is ‘Key 103.’ As you can see, the coverage is very different, mainly because they are using different transmitter sites and different powers on FM. But, of course, both of those services and others are on the same multiplex for DAB, so you have to think ‘what exactly is it on FM that we are trying to match?’ It’s no good just matching Key 103, you can’t just match to Key 103 because then you would be missing out BBC Manchester and other services. In this case, commercial [radio coverage] is smaller. In other cases that we have looked at, the commercial [stations] cover one part of the county but not another, but the BBC [station] will do the opposite.
So, what we’ve then done is to look at the composite coverage of both BBC local [radio] and the largest commercial station. So this is what we think people in the area would expect to be able to hear as a local service on FM. So you get either the BBC or the commercial radio [station] or both. So that’s the basis of what we think we should be trying to match. So it would be sort of green or blue for indoor, and the yellow bits for road coverage. As I say, we’ve done that for basically every area in the country, including the Nations services – so Radio Scotland, Radio Wales, etc for the BBC – and for the national services as well.
The question then is ‘how do we match DAB [to FM]?’ So the approach to that again has been to build up a link budget for DAB, starting with the transmitter and going right the way through to the receiver. And we’ve been doing receiver tests as part of that. And what we tried to do – because that sort of coverage is slightly debatable on FM – is [identify] where exactly is that band, and where exactly is that field strength? The approach we have taken is, first of all, to say that, within the editorial area, let’s plan for absolutely universal coverage. So how many transmitters – if you wanted to cover it as near as possible to 100% – how many transmitters would you need, both to get indoor coverage and road coverage as well? And we’ve tried to do that in a sort of commonsense way by starting with where the existing FM transmitters are. So rather than just look for new sites, because actually if coverage from FM is good from that site, so you should get decent coverage from DAB from that site as well. And then we’ve added on transmitters at decreasing levels of coverage until you get as close as we can to 100%.
Then, once we’ve done that, we’ve said ‘okay, actually some of those are now covering areas which aren’t covered by FM’ so actually you might not need them. So then you can then sort of roll back from that full universal coverage. The question then is ‘where do you draw the line?’ So, if you look at Manchester. Again, you’ve got the editorial area, which is a bit hard to see on this, but is the solid purple line around the edge. That is the existing local DAB coverage in Manchester, so you see 66.4% of households at the moment. In terms of households [for FM coverage], we have got 96.2% indoor at the moment, 98.2% (that’s a slightly sort of spurious measurement because it’s not actually a road measurement, but it’s households), so 96.2% for FM. So 66.4% existing [DAB] coverage from the two transmitters which are currently operating from the Manchester multiplex. It is one in central Manchester – sort of there – and there is one at Winter Hill at the top in the northwest corner.
We then looked at ‘okay, what would you do if you just increased the power of the existing transmitters and moved them up the mast a bit?’ And, actually, that gets you, as you can see, quite significantly increased coverage. In order to do that, we need to change the frequency plan, and I’ll come back to that in a minute. So that gets you up to 82% [DAB coverage] and then we keep adding on transmitters until we get as close as we can to 100%. This goes to 99% and that means 15 transmitters which are shown by the crosses dotted all over that map.
But then, as I say, you look at it and you say ‘well, actually, the two smallest of these – which are these two up here – actually have no household coverage at all, and the smallest one only adds 8km of road coverage.’ Now, obviously, if you’re driving and you lose your radio reception, then that’s a problem. But there’s a question as to whether that is essential for local coverage – it might be for national, but is it for local? So the question is ‘where do you draw that line in terms of a sort of cost/benefit analysis,’ if you like? You might decide, actually, you wouldn’t bother with those, but the question is ‘how far down the list of 15 [transmitters] do you go,’ as to what’s commercial viable and what provides an acceptable level of service to consumers?
So that’s the approach that we’ve taken. As I say, in order to do that, we need to change the frequency plan. Those are the big [frequency] blocks we use for DAB at the moment, dotted around the country. And you can see that they – the colours represent frequencies – so you can see that we have to reuse the same frequencies over and over again around the country. And that does cause interference so, at the moment, Manchester uses the same frequency as Birmingham. And, because of that, we can’t increase the power of the Manchester transmitters to get beyond that 66% to the 82% [coverage]. And that problem is repeated around the country. So what we’d like to do is re-draw the frequency map, which means that, as far as consumers are concerned, means doing a re-scan of their radio but does then allow us to boost the coverage quite significantly from existing transmitters and reduces that problem of interference which, in same places, can be quite significant. In order to that, it’s quite a long process – we need international co-ordination – but that part of the planning process we are going through at the moment.
So, the next steps are to finalise that frequency plan and begin the international co-ordination. We’ve got to complete the FM coverage maps and just check that link budget for FM, both for local and national [stations]. And then, for each of the local DAB areas and for the BBC national multiplex and for Digital One, the commercial multiplex, to produce the coverage maps and the household count and the road count as well for all of these existing multiplexes. Once we have done all of that, we plan to publish the whole thing later in the spring or early summer in a consultation so that we can then begin a debate as to whether this approach is actually right or not, and where it gets us.
Obviously, one of the big questions in all of that is actually ‘how much does it cost the broadcasters?’ I should say that that’s not something the Coverage Planning Group is looking at. It’s not something that we’ve been asked to look at, so it’s purely a technical approach at this stage but we think, sort of by the end of April, we should have the answers of how many extra transmitters you would need in order to achieve switchover.”
So the overarching question posed by the forthcoming Ofcom consultation seems to be: how poor can DAB coverage be made but still be accepted by consumers? If Peter Davies’ workplan, as explained here in February 2011, sounds vaguely familiar, it might be because he had addressed the Radio Festival in July 2008 and promised:
“Once we have defined what existing DAB coverage is, we then have to work out what it would take to get existing DAB coverage up to the level of existing FM coverage. Now, we have already done a lot of work on this, and certainly enough to inform the interim report, and the whole thing will be finalised in time for the Digital Radio Working Group final report later this year.” [see Dec 2008 blog]
Incredibly, three years late[r], the promised work is only just being completed. An amazing lack of urgency has been demonstrated by Ofcom, despite DAB radio resulting in more correspondence from angry consumers to the broadcasting minister Ed Vaizey than any other issue.
What most astonishes me is that the digital radio sector is still trying to persuade people living in Manchester to purchase a DAB radio, just as it has for the last twelve years, when it knows that there is a one-in-three chance that a Manchester household will be unable to receive ANY local stations via DAB, according to Davies. I assume a similar situation prevails in other cities.
Time for a class action by disappointed DAB radio receiver buyers?
[no accompanying graphics because DCMS explained: “Peter Davies’ Ofcom presentation is not attached as the content is still work in progress. Ofcom plan to publish all of the data later in the year.”]
House of Lords Select Committee on Communications
Inquiry on Governance & Regulation Of The BBC [excerpt]
22 March 2011 @ 1515
Baroness Deech: Listening to you, I am a bit puzzled about why you are so keen to hold back the BBC. Can’t Virgin Media and the local commercial radio stations stand on their own two feet? Why have they got to hold back the BBC?
Mr Andrew Harrison [chief executive officer, RadioCentre]: I would not characterise it at all as wanting to hold back the BBC; I would characterise it as wanting a level playing field for the commercial sector to compete. The truth is that, in radio, the BBC is hardly held back. It has 55% national market share, it has the vast majority of national FM spectrum and it has a huge raft of local radio stations, so it is hardly held back. We seek the opportunity to build our own commercial businesses, entrepreneurially and innovatively, without facing the elephant in the room that, every time we try to do something new, there is a BBC service that pops up to squash it before it has time to be established.
Mr Andrew Barron [chief operating officer, Virgin Media]: With great respect, I think we are in slightly different places. I would argue that Virgin Media is one of the companies pushing the BBC forward in many instances.
[This is an uncorrected transcript of evidence taken in public and webcast on www.parliamentlive.tv. Any public use of, or reference to, the contents should make clear that neither Members nor witnesses have had the opportunity to correct the record.]
When UK companies that had once anticipated they were poised to make a mint out of ‘DAB radio’ realise that things are not going the way they had wanted, they lash out. That seems to be what happened yesterday. ‘Shoot the messenger’ appeared to be the digital radio industry’s reflex response when backed against a wall of facts that tell an unpalatable story.
At the Westminster Media Forum conference on digital radio, a graph of DAB/digital radio receiver sales was displayed in a presentation by The Guardian’s Jack Schofield (see below):
The graph clearly showed that 2010 unit sales were down on 2009, and that 2009 unit sales were down on 2008. This data was collected by GfK.
Anthony Sethill, founder and chief executive of Frontier Silicon, took exception to this graph’s narrative of declining consumer interest in DAB radio receivers. He commented:
“My company supplies the chipsets that drive about 80% of digital radios on the market today. So, I think the panel today, with the exception of Andrew [Harrison, RadioCentre chief executive] is a wonderful example of how the minority seem to take the stage and voice the negativity and things. And, if we were to re-run Jack’s presentation again, put some facts in the correct order, and the correct facts, I think we would have a very different read. You know, it’s very difficult, when you have people like Jack that have a national platform in terms of a national newspaper, to voice these views.
So we’ll start with the GfK data. Now, GfK is actually a retail audit and, over the years, has been used by the consumer electronics and the retail trade in the UK to measure the sales of consumer electronic devices. In the last few years, GfK has been dying. The reason it has been dying is that it relies on the data – sales out data – from national retailers such as Dixons and John Lewis and Tesco and so on. Last year, Dixons pulled the plug on supplying data to GfK. That meant the largest retailer in the UK, which accounts for 25% of all sales, actually stopped giving them data. To carry on selling that data, [GfK] then had to formulate panels and most people in the industry know that, statistically, it’s not valid and that, basically, it’s falling apart. Now, you’ve quoted GfK [DAB/digital radio receiver] sales falling and I’ve given you the reasons why that data is not accurate. […]
This is a practical example of discrediting the data, which a number of people use to bash DAB. So this is one small example of how you’re misinterpreting and you’re misleading people. I don’t know if you understand what GfK is, or what it has done, or why it has fallen apart but, if you do, then that’s really poor. And if you don’t, before you quote it, you should learn the facts.”
The graph to which Sethill was referring was created by me and published in this blog last weekend (Jack Schofield had asked before the conference if he could use it in his presentation). I had first published these DAB/digital radio receiver sales data in a blog in January 2011, in which I wrote:
“1.94m digital radios were sold in 2010, compared to 1.99m in 2009 and 2.08m in 2008. Increase? No. Growth? No. Over 2m in 2010? No.”
In March 2011, these same sales figures were reprinted in The Telegraph newspaper, which wrote that “new figures showed that sales of digital radio equipment actually fell last year.”
It should be noted:
• The sales data in my graph were distributed by Digital Radio UK, the radio industry organisation marketing DAB radio in the UK
• Digital Radio UK purchases these data concerning DAB/digital radio receiver sales from GfK
• Digital Radio UK has regularly quoted these GfK data in its press releases (most recently on 23 Dec 2010 and 21 Dec 2010) and in its newsletters
• Digital Radio UK has never publicly challenged the validity of the GfK sales data that it is distributing and using in its marketing campaigns
• Until now, these data on DAB/digital radio receiver sales have been widely reported in the public domain without challenge from the wider digital radio sector.
So what is eating Frontier Silicon? It seemed wholly inappropriate for Anthony Sethill to beat up panellist Jack Schofield in public for using the digital radio industry’s OWN DATA in his presentation. If Frontier Silicon has an issue with the digital radio industry’s sales data, it should take that up with Digital Radio UK, which purchased the data from GfK and distributed them.
Perhaps the real issue is that the rewards from DAB radio have evidently still not materialised for the digital radio industry. By year-end 2009, Frontier Silicon Limited had an accumulated loss of £28m. In financial year 2009, it generated an operating loss of £536,000 on turnover of £22m. Its shareholders include Digital One (owned by Arqiva) and Imagination Technologies (which owns Pure Digital). Imagination owns 9.3% of Frontier Silicon, a stake that it wrote down by £3.4m in 2008, and then finally wrote down by a further £3.6m in 2010. As Imagination’s accounts explained:
“Due to the lower resulting valuation of the business and the impact of Frontier’s capital structure, the Group’s investment [in Frontier Silicon] has been revalued to £nil.”
I guess it must be tough for Frontier Silicon to see a shareholder value its business at “£nil.” That is no reason for its unprovoked attack on Jack Schofield's presentation which had merely used the industry's own data.
................
I contacted GfK for its response to the comments from Frontier Silicon. Its response was (in full):
Date: 6th April 2011
GfK Retail and Technology UK response:
GfK Retail and Technology UK currently track over 100 individual technology product categories and partner with major UK multiple retailers within every single audited channel they report on, to complement this research and to ensure GfK cover the overall market they also have a representative sample of independent retailers working with them. This means GfK are receiving weekly data from over 24,000 individual stores within the UK. The majority of these retailers deliver weekly EPOS data on their complete sales and this allows GfK to report to a detailed level on the performance of all the leading technology categories. If faced with a retailer who is not willing to participate GfK employ a widely used global research methodology to ensure they are representing the overall market.
When challenged on the GfK reported performance of the DAB market Commercial Director Anthony Norman commented “the overall technology markets have all come under increasing pressure in the last 12 months, the austerity measures announced and now being implemented by the coalition government have had a major impact on consumer confidence which has in turn impacted on retail sales of technology areas”. Norman continued in specific reference to the DAB market “the reported data by GfK is based on over 70% live reported sales by retailers, rather than focussing on the downturn of this market it would be more beneficial to put the whole picture in perspective. The overall technology market has experienced only 4 months of growth in the last 33 months. The average decline in this area is 6%, for DAB the market in 2010 declined by only 2%. Given the overall sector performance this is something that should be recognised. As a business GfK are committed to delivering actionable insight to the industries they operate within”
The GfK Group
The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It offers a comprehensive range of information and consultancy services in the three business sectors of Custom Research, Retail and Technology and Media. The no. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2009, the GfK Group’s sales amounted to EUR 1.16 billion. For further information visit www.gfkrt.com or www.gfkrt.com/uk
Some of Digital Britain’s radio recommendations were unworkable. However, the notion has remained that FM and AM analogue transmitters of the UK’s national radio stations will be switched off once digital radio listening passes the 50% threshold. This was never practical. It was a ‘threat’ propagated by government to the public in the hope of forcing them into buying more DAB radios, instilling fear that they would otherwise lose their favourite stations. The threat failed.
The problem with any threat is that, once it has failed, it remains difficult for the protagonist to climb down. So the threat continues to be propagated. For what reason now? So as not to make those who issued the threat look completely foolish. The need to save face has locked the government apparatus into a fiction that BBC and commercial radio will willingly throw away half their audiences by closing their FM/AM transmitters. This was never true.
THE BBC
‘Universal’ reception of the BBC’s core public services is mandatory. It would prove impossible to levy the BBC Licence Fee on every UK household if (almost) the entire population could not receive the BBC services for which they pay.
The BBC Charter & Agreement requires:
“12. Making the UK Public Services widely available
(1) The BBC must do all that is reasonably practicable to ensure that viewers, listeners and other users (as the case may be) are able to access the UK Public Services that are intended for them, or elements of their content, in a range of convenient and cost effective ways which are available or might become available in the future.”
Would the BBC switch off analogue transmissions of its national networks once more than 50% of listening was attributed to digital platforms? Of course not. You would be a complete fool to slash your radio audience by half, particularly as such an action would contradict the BBC Charter & Agreement.
Could the government insist that the BBC switched off the analogue transmissions of its national networks? Only if it wanted a revolution on its hands. It would be difficult to think of a policy more likely to lose it the next General Election.
COMMERCIAL RADIO
The revenues of commercial radio are directly related to the sector’s volume of listening. If commercial radio switched off its analogue transmitters once digital listening had passed the 50% threshold, at a stroke it would risk losing 50% of its volume of listening and, subsequently, 50% of its revenues. Would it do that? No, of course not.
RadioCentre’s self-interested ‘policy’ has been to argue that the BBC national networks should turn off their analogue transmitters first, years in advance of commercial radio stations. Radio Chicken, anyone? Naturally, RadioCentre failed to mention that the outcome of this proposal would be likely to significantly increase its member commercial radio stations’ analogue audiences and revenues. There is nothing quite like trying to persuade your competitor to commit joint suicide … first.
Additionally, the value of commercial radio companies is vested in the scarcity of their analogue FM/AM licences. Because no new analogue licences are awarded by the regulator, each existing licence has a significant intrinsic value, even if the business using it is not profitable. The same is not true of DAB licences. Anybody can apply to Ofcom for a DAB licence by filling in a form and paying a relatively small fee.
An example of the value of analogue licences to commercial radio owners is Absolute Radio. In 2008, Times of India paid £53.2m for Virgin Radio, comprising one national AM licence and one London FM licence. Having re-launched the station as Absolute Radio, the company lost £4.3m in 2009, but its balance sheet still retains considerable value because of the scarcity of its two analogue radio licences. If Absolute Radio were put up for sale, someone would be interested in buying it because of that scarcity.
By contrast, when DAB commercial radio services such as Zee Radio, Islam Radio, Muslim Radio, Flaunt and Eurolatina no longer wanted their digital radio licences in 2010, there was no queue of potential buyers. They simply handed their licences back to Ofcom because those licences were not scarce.
This is why it would prove financially suicidal for commercial radio to switch off its FM/AM transmitters. It would have to write down the value of those scarce analogue licences to zero in its balance sheets which, at a stroke, would negate almost the entire value of the licence owners. Not a good company strategy.
So, when headlines such as ‘Absolute Radio mulls AM switch-off’ appear in the trade press, they should be read with a bucket of salt. The headline might as well say: ’Absolute Radio mulls destruction of shareholder value.’
And, when yet another DAB proponent appears on radio or television to persuade you, in all seriousness, that the UK’s most listened to national radio services – both BBC and commercial – will imminently be switching off their AM/FM transmitters, please feel justified to laugh in their face.
This is about as likely to happen as Tesco putting security guards at their store entrances to tell the public to shop elsewhere because they want fewer customers.
FOOTNOTE:
It emerged last week that, after the Norwegian state classical music station ‘Alltid Klassisk’ abandoned FM transmission on 1 July 2009 for DAB transmission, its audience contracted from 25,000 to 10,000 per day.
Now, consider that only 20% of listening to BBC Radio 2 is via digital platforms (in Q1 2010), lower than the 24% average for all stations [see Sep 2010 blog]. If that average ever managed to reach the 50% threshold, it might leave 60% of Radio 2’s audience still listening via analogue. That’s 8m listeners that Radio 2 would have to turn its back on as a result of FM switch-off. Time for the BBC to start erecting barricades outside Broadcasting House.
[thanks to Eivind Engberg]
‘You & Yours’
BBC Radio 4
28 March 2011 @ 1200 [FM only]
Julian Worricker, presenter [JW]
Paul Everitt, chief executive, Society of Motoring Manufacturers & Traders [PE]
Laurence Harrison, technology & market director, Digital Radio UK [LH]
JW: Now, car manufacturers have long prided themselves on arming their vehicles with the latest groundbreaking technology, but there’s one in-car gadget which has remained stuck in the twentieth century. Radios in cars, generally speaking, are FM/AM analogue, and not digital. Around 20% of all radio listening takes place in the car, that’s according to RAJAR, the organisation which counts these things. So, if the UK is to go all-digital and the analogue signal switch is turned off – and that, of course, is the plan – cars need to be equipped with digital radios.
JW: Well, car manufacturers are planning that all new vehicles will have digital radios fitted from 2013. And, now, Ford says it will make digital radios available in its cars a year earlier than that. This will all help achieve the target that 50% of all radio listening should be digital, which is one of the pre-conditions for turning off the analogue signal. We can explore this with Paul Everitt, who is the chief executive of the Society of Motoring Manufacturers & Traders, and with Laurence Harrison, the technology & market director from Digital Radio UK, which is the company set up by broadcasters to help with the switchover. Gentlemen, good afternoon. Paul Everitt, why is the car industry pushing ahead with installing digital radios by 2013?
PE: Well, I think there are two key reasons. The first is because that’s the agreement we had with government as part of the Digital [Radio] Action Plan. They recognised that listening in-car was a key part of radio listenership and, therefore, early introduction of vehicles with digital radio was a key part of the package that needed to be achieved. But, I think, increasingly, what we are seeing, and certainly the announcement from Ford that you mentioned slightly earlier, is actually about the consumer saying that this is something that we want. The consumer now has an increasing opportunity to experience both the listening quality of digital in-car, but also the content, the increasing content, and desirability of the content on digital, as well as gradually and increasingly improving coverage. So, it’s a combination here of ….
JW: [interrupts]: Right, right, I just want to ….
PE: …. both something that we have to do, or we have agreed to do. But I think, increasingly, this is a push that is now coming from consumers.
JW: Okay, I just want to scrutinise that a little, because I don’t doubt that Laurence Harrison will say the same thing because we are told this is consumer led. But, surely, the truth of the matter is that the consumer has been led because of what the government requires you and others to do, so consumer choice only goes so far here.
PE: Well, I think we can argue the finer points of this, if you like. But, from an industry point of view, we began to be involved in this discussion during the course of 2008, obviously the conditions during 2009 with the development of the Digital Britain report brought that forward, or conclusions from that report have been built into vehicle manufacturers’ plans. But, as I say, what we are actually seeing today is, you know, increasing interest in digital from consumers.
JW: Okay. Let me bring Laurence Harrison in on coverage because, as I understand it, at least 90% [population] coverage is a target. That’s part of the targets that will only allow the switchover to take place. Now, 90% sounds positive until you then think about the 10% who can no longer hear what they are listening to now.
LH: Well, I think the key thing on coverage is to become the equivalent of FM coverage. So the 90% figure you refer to is around local coverage. Actually, on the coverage of national services, we are already at just over 90%, and the BBC has just recently committed to build that out to 93% by the end of this year. And the target thereafter is to get to FM equivalence as soon as we can, so that programme is well underway.
LH: And, if we are driving from A to B a significant distance, can we be sure that that coverage will remain consistent over that distance?
PE: So, you’re absolutely right. Of course, for the car market, geographical coverage is vitally important. What we do know now is that the vast majority of motorways and A roads have got good coverage, and significant coverage on B roads and smaller roads. But we are working with broadcasters to try and prioritise the road network going forward.
JW: Paul Everett, what about those who can’t afford to buy a new car after 2013 with a smart digital radio inside it? When that switchover eventually happens, what happens to them?
PE: Well, this has always been our biggest – or one of our biggest – concerns, which is that how do we retro-fit the entire vehicle parc? We are currently looking at something between 25 and 30 million vehicles all up, so it’s quite a challenge. What we have seen over the course of the last year – 18 months – is relatively low-cost adaptors. I think now ... I mean the prices vary, but certainly less than £100 to adapt your vehicle, and these are sort of a relatively basic unit, so not desirable for everybody …
JW: What does 'relatively basic' mean in terms of what it will actually do?
PE: Well, it means you get a digital reception but you have to kind of plug it into the cigarette lighter and have a bit of an aerial up and …
JW: It’s a bit Heath Robinson, isn’t it?
PE: We would agree with that. From our perspective, we’ve been very much focusing on what we would see as an integrated unit. So, something that you can put into your car or have installed in your car which would effectively mean that you could just use your standard radio to receive digital broadcasts. Now, we’ve seen … I’ve seen first kind of trials of that technology. We hope that that’s going to be available from sort of around the end of this year – the beginning of next year – so we’re already seeing a market begin to develop and, as I say, I think we … well, there are two ways of looking at the problem. One is that we must all prepare because this switchover is going to happen. Or the one which we are focused on is: the more consumers have experience of digital, the more they like it and want it and therefore that’s a market driver, rather than sort of an administrative pull.
JW: No, and that’s a fair point because I read some surveys, Laurence Harrison, that I know you were quoted in in recent weeks. But the point that has just emerged from the last comment, surely, to put to you are that whatever we do here, it is going to cost us and we do not have any choice over that.
LH: Well, I think the stage we are at at the moment, as Paul said, is that we have not got a confirmed switchover date now, so what we are trying to do is build momentum.
JW: But it will happen one day.
LH: It will happen one day, but what’s going to drive people towards digital radio is the great content we’ve got. The same happened on TV. So if you look at the offering now on digital radio, you’ve got the soon to be launched BBC Radio 4 Extra on Saturday, 5 Live Sports Extra, 6 Music, Absolute 80s [and] 90s, Planet Rock, Jazz FM has just announced it is going onto the digital network, so the content offering has frankly never been better and what we do know about people that have digital radio is that once they’ve tried it, they love it.
[The programme was followed with a Yours & Yours blog which invited comments from listeners on their experiences with DAB radio in cars. David Blunkett MP submitted a comment to the programme about his experiences with DAB, upon which listeners made further comments.]
……………………………
‘You & Yours’
BBC Radio 4
1 April 2011 @ 1200 [FM only]
Peter White, presenter [PW]
David Blunkett MP [DB]
Lindsey Mack, senior project manager of digital radio, BBC [LM]
PW: Now, you’ve all been writing in, telling us about your frustrations with digital radios, after Monday’s report on how Ford is planning to install DAB radios as standard in some new cars from next year. Steve told us about his A370 journey between Cardiff and North Wales: perfect listening for 30 miles outside the Welsh capital, then nothing for 150 miles. By contrast, over on Anglesey, Steve tells us the only place that silences his DAB car radio is the Conwy Tunnel. Another correspondent was former Home Secretary, David Blunkett. He’s had trouble getting a DAB signal at his home in Derbyshire. So we brought him together with a senior digital manager for the BBC, Lindsey Mack, and David started by challenging the main claim of digital supporters that DAB achieves 90% coverage.
DB: My thrust was that there are not 90% of the population with access to digital [radio], and many of those who claim to have access have intermittent or interference with the access. And I’m a classic [case] because I can just about get digital radio in North Derbyshire, where I rent a cottage, if I hold the radio up to the roof, or I find one particular spot on the kitchen window sill. Get it out of kilter and either the signal goes or, as quite often I get, even in London, it breaks up.
PW: Right, let me at this point bring in Lindsey Mack. A lot of our e-mails mirrored what David had to say, and particularly this point: that the quality isn’t adequate for many people, even if they’re … it’s said they have reception, and in that so to talk of [FM radio] switch-off at this stage, you know, seems wrong.
LM: Over the last sort of two years, the BBC has been very committed to building out its DAB coverage. We actually are at 90% of the UK population, but that doesn’t mean that everyone’s going to always get a very good reception. A lot of it does depend on the device you have, as well. There are some receivers that are a little bit more sensitive than others. And, in fact, we’ve actually just been doing some tests on the last sort of bestselling sort of ten or dozen receivers in the market.
PW: But what a lot of people said to us, and I suspect David will reiterate this, is that FM, which digital is going to replace, that has a much more stable signal and that, even if you start to lose that signal, you don’t lose it altogether in the way you often lose the digital [signal] or it just goes into sort of burble.
LM: Yes, and with DAB, you usually either get it or you don’t. I mean, looking in Derbyshire, we’ve actually got very good coverage, especially North Derbyshire, so perhaps after this we could actually talk to David about the device he’s actually got, as well, just to see which one he’s actually using. Whilst the BBC has been very committed to DAB and extending the coverage, we are now actually having to make the existing coverage more robust, and that’s actually what we haven’t been doing as much before. What we’ve done before, we’ve concentrated on just rolling out DAB. Now we know we’ve got to really look at the whole way we’re measuring DAB. We’re looking at indoor coverage in particular. You know, originally, when we launched DAB, we actually based all our coverage on car listening and then, obviously, car listening didn’t take off the same way as people are actually listening indoors.
PW: Well, it couldn’t because there weren’t [DAB] radios in cars.
DB [laughs]: Absolutely.
LM [laughs]
DB: It is a problem, Peter, actually, that if you can’t get it and you can’t hear it, you can’t appreciate it. I’ve got no problem with the extra reach and the way in which [BBC] Radio 7 is now going to become Radio 4 Plus or, whatever, Extra. My problem is that there’s a big over-claim for this. Let’s take it steadily, let’s try and get it right, let’s not claim that people have got a service when they haven’t and, particularly, let’s not say – which was what the sell for DAB was – that this is going to be higher quality when, as you’ve just described, the burble, the break-up, the lack of a good sound... I have three DAB radios up north. I’ve tried them all in different places, so it’s: please don’t do to me and to the audience what always happens, which is: it is not the fault of the deliverer, it’s the piece of equipment you’ve got, and they’re pretty good pieces of equipment.
PW: But, David, it was your own government who published Digital Britain and it was your own government that set the 2015 date.
DB: Yeah, and I criticised them at the time. Everybody wants everything now. They want it faster, they want to claim it as the greatest quality. I mean, everything is always ‘the best ever.’ And, frankly, it isn’t and if we just accept that and say ‘lets take it steady and lets try and get it right,’ we’ll all be on the same page.
PW: So it isn’t the principle that you’re against. It’s the practice, really.
DB: Yes, it is. I mean, if FM is better than DAB, let us continue for the time being with FM and, in many parts of this country, it is.
PW: Lindsey Mack, 2015 is supposed to be dependent on, you know, the state of digital [radio listening] and the public’s attitude to it. There’s a report in the papers this week that, in fact, digital sales of digital radio have actually fallen, and fallen for the second year running.
LM: They did fall slightly down last year, compared to the year before but, to be very honest, over the last sort of quarter, the consumer electronic market has been hit very badly. Not just in terms of radio sales, but other consumer electronics as well. You know, the BBC is working very closely with commercial radio and doing a lot of sort of joint promotions. We have to get our messaging right on this.
PW: A lot of our listeners said ‘if it ain’t broke,’ you know, ‘don’t fix it.’ In other words, okay, people quite accept that you’ve got, that you should move on, and that digital probably is the next thing, but why get rid of FM before … in some ways, some people said ‘why get rid of it at all’? Why can’t they exist side by side?
LM: But we’re not getting rid of FM totally. What we’re saying is that the BBC services – the national services – are on FM and DAB, and also we have our digital-only stations on DAB. By 2015, we have to … hopefully, we will have reached 50% digital listening. That’s not [just] DAB. It’s digital listening across all platforms. But there’s a lot that has to be done by, you know, at 2015, and beyond that.
PW: Are you happy about that 2015 date?
LM: 2015 is just … is a date that the industry can focus on. It is not a switchover date. What we have to achieve by then, though, if we can, is obviously digital listening up, we have to have good coverage rollout which has to be robust. People have to be able to turn on their radio and it has to work.
DB: Well, just one final message, Peter, which is that Lindsey’s done a pretty good job at defending the indefensible …
LM: [scoffs]
DB: … and I commend her on it, but don’t get carried away by the anoraks. They’ll tell you anything is working, even if it isn’t.
PW: So what would be your … what’s your solution? What would you want the BBC to do, David?
DB: I’d want them to be absolutely clear and honest and to say: there are problems with this, we’re resolving them, we want people to buy the [DAB] radios because they’ll get the extra coverage of different channels, and we want to keep FM as long as it’s necessary for people to be able to listen to Radio 4 properly.
[thanks to Darryl Pomicter & Luke Shasha]
