Lies, damned lies and … Ofcom’s first digital radio progress report

Ofcom quietly published its first Digital Radio Progress Report in July 2010, without fanfare or a press release. This report has been a remarkably long time coming, given that DAB radio has been with us more than a decade. During that time, Ofcom has published 26 Digital Television Progress Reports, starting in 2003.

Here was an opportunity for Ofcom to demonstrate that it is acting in the public interest by publishing solid, objective data about the progress of digital radio in the UK. Did it take that opportunity? No. Instead, Ofcom published a set of data that are so selective and so distorted that they misrepresent the progress (or lack of it) made to date in advancing the UK towards the ‘digital radio switchover’ that our government is determined to execute. Why? Because Ofcom (like the government’s DCMS department) seems determined to persuade us that its totally unrealistic plan for DAB radio has not been an unmitigated disaster with the citizen/consumers on whose behalf it is supposed to be working.

It might appear pedantic to pick over the details of data represented in this feeble 24-page Ofcom report. However, it must be stressed that this is no nitpicking exercise. The Digital Economy Act 2010 insists that this very document submitted by Ofcom (and another by the BBC) to the government will decide whether the UK will progress to ‘digital radio switchover’. It is these data that will decide whether we can continue to receive BBC network radio stations on the 100 million analogue radios that are out there. It is these data that could mean we have to replace perfectly satisfactory analogue radio receivers in every household across the country, at a cost of millions to consumers.

To note the issues in the order they appear in the Ofcom report:

FIGURE 1
This Ofcom graph purports to show that:
• Digital platforms’ share of radio listening increased from 12.8% to 24.0% between 2007 and 2010 (this is TRUE)
• Analogue platforms’ share of listening decreased from 87.2% to 76.0% between 2007 and 2010 (this is FALSE)

The four figures cited in Figure 1 for the analogue platform – 87.2% in 2007, 82.2% in 2008, 79.9% in 2009 and 76.0% in 2010 – are an Ofcom invention. These false data seek to demonstrate that a rapid decline in analogue listening has taken place. This is not true. As the graph below shows, analogue listening has remained remarkably static over this timeframe.

  

   

The situation is complicated by two facts: a significant proportion of radio listening remains ‘unspecified’ by respondents in RAJAR listening surveys, and that this proportion has varied greatly in size in different surveys. However, this does not detract from the falsehood of Ofcom’s attempt to demonstrate that analogue listening is in sharp decline.

FIGURE 2
This Ofcom graph purports to show that:
• 54% of 15-24 year olds use digital radio
• 57% of 25-34 year olds use digital radio
• 56% of 55-64 year olds use digital radio
• 46% of 65-74 year olds use digital radio
• 29% of 75+ year olds use digital radio.

In fact, the fine print explains that Ofcom had asked the question ‘Have you ever used digital radio?’ This ensured that the results were almost meaningless because they tell us nothing whatsoever about current usage of digital radio. For example, a 68-year old who, on a single occasion ten years ago, had listened to digital radio for 10 minutes will have answered ‘yes’, despite having made no further usage during the last decade.

Ofcom’s objective here seems to have been to highlight the large size of the resulting numbers, without indicating that they derive from an almost useless question (garbage in, garbage out). If you were to ask people ‘Have you ever bought a banana?’, almost 100% would respond ‘yes’. Their answers tell you absolutely nothing about the current market for bananas. Exactly the same is true of digital radio usage. In this context, the resulting numbers seem remarkably low because only half the population has ever tried digital radio (even once in their lifetime).

FIGURE 3
This Ofcom graph purports to show that:
• 53% of adults use digital radio
• 63% of adults in socio-economic groups AB use digital radio
• 55% of adults in socio-economic group C1 use digital radio
• 48% of adults in socio-economic group C2 use digital radio
• 42% of adults in socio-economic groups DE use digital radio.

Just as in Figure 2, the fine print explains that Ofcom had asked the question ‘Have you ever used digital radio? The same issues apply here as with Figure 2.

FIGURE 5
This Ofcom graph shows digital platforms’ share of total radio listening, but the data omit:
• A comparison with the analogue platform
• A time sequence to show how fast the market is changing.

The following graph demonstrates the slow growth of digital platforms and their low level in comparison with analogue. It also demonstrates that a proportion of the growth in digital platform usage is the result of a statistical technicality caused by a reduction of ‘unspecified’ listening in recent quarters.

The following graph demonstrates the slow growth of individual digital platforms since 2007, using the same scale as applied in the preceding graph.

FIGURE 8
This Ofcom graph purports to show that:
• “five digital-only services generated a weekly reach of 1 million+ listeners in Q1 2010.”

However, the fine print explains that the Ofcom data refer to “all listeners [aged] 4+”, whereas the radio industry’s standard metric is and always has been 'adults 15+'. Indeed, all RAJAR audience data used in this same Ofcom report refer to 'adults 15+', except for Figure 8.

Once the graph is re-worked using '15+' instead of '4+' data (see above), it is evident that:
• Only three digital-only radio stations generate a weekly reach of 1m+ adult listeners
• BBC World Service was included in the Ofcom graph (and was one of the five stations cited as exceeding 1m weekly reach) even though it is not digital-only, being available across a large part of the UK on 648AM
• BBC Asian Network was omitted from the Ofcom graph (also available on analogue but limited to the Midlands)
• Not only are Panjab Radio and NME Radio no longer available on the national DAB platform (as the Ofcom text notes), but Q Radio is no longer on DAB, and the BBC has proposed the closure of Asian Network
• These weekly reach data for digital-only stations should be considered in the context of analogue radio stations – for example, BBC Radio 2 has a weekly adult reach of 14.6m.

FIGURE 9
This Ofcom graph purports to show that:
• Digital radio’s current share of listening is “broadly in line with the organic growth outlined on the [government’s] forecast chart.”

Bizarrely, the Ofcom graph displays the government forecasts but has omitted the historical data that would show how successfully the forecast has been achieved to date.

The forecast published in June 2009 predicted that, by year-end 2009 (a mere six months later), digital platforms would account for 24% or 26%, the latter the result of a concerted ‘drive to digital.’ In fact, the year-end figure was 21%. The likely reason that Ofcom has failed to include the historical data is that neither of the two forecasts (‘organic growth’ or the ‘drive to digital’) has any chance of being realised. If the current growth rate is extrapolated, the 50% criterion will be reached by year-end 2018, and certainly not by either 2013 or 2015, as the forecast (credited to Value Partners) predicted.

FIGURE 14
This Ofcom graph and accompanying text assert that:
• “DAB sets made up over a fifth (21%) of all radio sales by volume” in the year to Q1 2010
• “In the portable market, DAB sets accounted for 65% of sales.”

However, Ofcom omitted to point out that:
• Fewer DAB radios had been sold in 2009 than in 2008
• DAB radios were a lower proportion of total radios sold in 2009 than in 2008
• Its reference to “the portable market” is limited strictly to ‘portable radios’ of the type used in kitchens. There is not a single mobile phone on sale in the UK that includes DAB radio, and the vast majority of portable media players that include radio do not have DAB radio.

In fact, the data in the graph above demonstrate that:
• DAB radio receiver sales volumes peaked in 2007/8 at 2.2m per annum and have declined 13% since then to 1.9m per annum
• Analogue radios contributed a greater proportion of total radio receiver sales in 2009 (79%) than they had in 2008 (78%)
• DAB has not invigorated the market for radios, with fewer radios sold now than ever, perhaps due to evident consumer confusion about ‘digital radio switchover’.

FIGURE 17
The Ofcom graph shows that:
• 17% of adults say they are likely to buy a DAB radio in the next 12 months.

However, the Ofcom graph does not offer a historical perspective. The graph above demonstrates that the propensity to purchase a DAB radio has diminished over time. In 2006, 17% of respondents said they would be likely to buy a DAB radio within the next six months. In 2010, 17% said they would be likely to buy a DAB radio within the next 12 months. This would translate into a significant reduction in DAB radio receiver sales. Additionally, the proportion of respondents who say they do not know if they will purchase a DAB radio continues to increase over time, perhaps a further symptom of market confusion or DAB indifference.
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Given that Ofcom has had the luxury of several years to prepare this first Digital Radio Progress Report, the result is a travesty. It should not be the regulator’s role to selectively highlight and distort data that support its own policies in a document specifically requested by government in order to inform a parliamentary decision on digital radio switchover. We deserve better from our public servants. Otherwise, they might as well go and work for Digital Radio UK, the lobby group (funded by commercial interests and the BBC) busy pumping out propaganda to try and persuade consumers that they need DAB radio.

On page 5 of this first Digital Radio Progress Report, Ofcom notes:

“Our principal general duty, when carrying out our radio functions, is … to further the interests of citizens in relation to communications matters.”

Exactly how are citizens' interests being furthered by Ofcom distorting the facts about digital radio take-up?

DAB radio's slow consumer take-up: lessons not learnt from FM radio 50 years earlier

“Without a knowledge of your history, you cannot determine your destiny”

Misty In Roots, ‘Live At The Counter-Eurovision 1979’

Recent history can teach us important lessons. Efforts to turn dreams into reality come a lot easier if we learn from what has gone before us, what has gone right, and what has gone wrong. This is as true in radio as it is in any human endeavour.

Dr. Stephen Lax, Senior Lecturer in Communications Technology at the University of Leeds’ Institute of Communications Studies, has written an excellent paper entitled ‘A Vision For Radio: Engineering Solutions For Changing Audiences – From FM to DAB’. It was published in a recent anthology ‘Digital Radio In Europe’. The following are excerpts taken directly from Dr. Lax’s work and document what the radio industry should have learnt from the slow consumer take-up of FM radio half a century ago before it embarked upon DAB radio.

“The introduction of FM was itself no straightforward matter of replacing its AM forebear, and neither have innovations in radio technology in the half century that followed been unproblematic. It is in the context of this history that the emergence of DAB should be studied.

Like DAB, FM was widely claimed to offer a significant improvement in sound quality in comparison with the then universal AM modulation system. By the early 1940s, its technical superiority was established. One leading figure amongst US radio engineers, W.R.G. Baker, suggested in 1943 that FM was ‘so much better technically than the present regular broadcast system that it can’t fail of acceptance.’ Yet, despite such advantages, for several decades it did indeed fail to be accepted as a replacement for AM.

[…]
Following a UK launch in 1955, the BBC rolled out the FM service relatively quickly: by the end of 1959, most transmitters had been upgraded and 96.4% of the population was within range of the signals; but, even ten years later, when coverage was over 99%, the corporation noted that only one third of households had any form of FM receiver. A similarly slow rise in the popularity of FM continued in the US: although FM services had begun there on the VHF band some ten years earlier than in the UK, it was not until after 1979 that FM finally achieved a higher share of listening than AM.
[…]
[In 1974], [BBC director of engineering James] Redmond expressed puzzlement at the slow adoption of FM, even for fixed reception in the home. Despite its superior sound quality, he noted that ‘changeover has been slower than anticipated.’ …. [One] reason was the simulcasting of radio programmes on FM and on AM, rather than offering new programmes on the new service: listeners would only be able to hear on FM what their AM receivers already gave them.
[…]
This history serves as an illustration of how an apparently self-evidently superior technology pursued as a solution to a problem of audio quality did not automatically find favour with listeners, who […] were apparently prepared to put up with inferior sound and were less inclined to adopt FM while it offered little new programming or competition with television in the evening.
[…]
A mismatch is revealed between the broadcasters’ and engineers’ beliefs as to what was important to listeners, and the preferences and priorities of the vast majority of those listeners themselves.
[…]
[A group of audio enthusiasts] was contrasted [by Wireless World magazine in 1961] with ‘the most important group of all, the reasonable layman’ who simply wants decent reproduction at a reasonable cost, and it is this far larger group that no doubt hesitated to replace perfectly adequate AM receivers with the more expensive FM variety.
[…]
…. early promotion of DAB by the industry certainly used the phrase ‘CD-quality sound’, and placed this and related phrases at the top of the list of DAB’s advantages.
[…]
However, just as the slow pace of adoption of FM confounded broadcasters, for whom its advantages were self-evident, DAB too has failed to gain an enthusiastic embrace from the audience.
[…]
The exhortation ‘radio must go digital’ has been expressed repeatedly over the years: for example, by the Director General of Audio Visual Policy at the European Union’s Media programme, Spyros Papas, in 1998; by BBC Director of Radio, Jenny Abramsky, in 2003; and, more recently, in 2009 by French National Assembly member Patrice Martin-Lalande and, less surprisingly, by Quentin Howard of World DMB. For these commentators, the logic of this transition is self-evident and so needs little explanation, technical or otherwise, and none is offered – put simply, radio cannot remain an analogue technology when all other consumer technologies are digital. Yet, however compelling the logic might be from a technical point of view, the development of both FM and of DAB have failed to follow it: both have emerged only slowly and, in the case of DAB, its future remains uncertain.
[…]
A further difficulty for DAB was the changing landscape of radio in many countries during the period of its development such that, by the time of its public launch in 1995, it was seen by some as reflecting a view of the radio industry that was out of date.
[…]
Just as, by the time FM was launched, other changes in radio had made its introduction more complex, so too we can observe similar, non-technological reasons for the problems in introducing DAB.
[…]
In the case of digital radio, it is possible to identify a number of intentions behind its development, from an imagined need to compete with other emerging technologies to a macro-economic need to aid a key industry. In contrast to the history of radio technology frequently presented as a straightforward series of technical challenges faced and solutions proffered, we find instead that apparently compelling innovations follow a complex path in which cultural practices and economic interests must be taken into account.”

[reprinted with permission of the author]

Cost/benefit analysis of DAB radio: Murdoch rushes in where governments fear to tread

Governments have had plenty of practice, over many years, of hiding reports from the electorate. In some cases, they might justify this as a matter of national security or military expedience. However, it is hard to understand how the UK government thought it could justify hiding from the public a cost/benefit analysis of digital radio switchover it had commissioned and then, a year later, have believed the matter had been successfully buried. But so it was, until the House of Lords Communications Committee intervened in early 2010.

On 6 February 2009, PricewaterhouseCoopers [PWC] delivered a 91-page report entitled ‘Cost Benefit Analysis of Digital Radio Migration’ to Ofcom. It contained a number of serious reservations that any benefits would arise from switchover to DAB radio, even by the year 2030:

“The results suggest that there are relatively few up-sides to the estimates, and several significant downside risks. … The results suggest that there is a very long pay-back from the Digital Radio Working Group [DRWG] policy ‘investment’ – the Net Present Value [NPV] turns positive after 2026. This result assumes that the existing multiplex licences are extended to 2030, as per the DRWG recommendations. Without the licence extension or any other policy instruments that provide clarity on the long term future of commercial radio, the industry and consumers may fail to see the benefits of digital radio over the longer term. Our analysis suggests that the NPV is negative should either of these two proposals not be implemented.” [emphasis added]

Since then, parliamentary policy has failed to provide “clarity on the long term future of commercial radio,” as evidenced by last week’s wholly ambivalent government statement about digital radio switchover. As a result, just as PWC predicted, industry and consumers increasingly “fail to see the benefits of digital radio over the longer term.”

The PWC report, and its verdict that digital radio switchover offers almost no benefits, remained hidden from public view from February until November 2009, when an appendix to the government’s Digital Economy Bill mentioned it casually. That citation raised questions: what was this PWC report, and why could not the public see it?

When the House of Lords Select Committee on Communications convened in January 2010 to consider the digital switchover issue, it asked those same questions of the Ofcom officers it invited to present evidence:

Baroness McIntosh of Hudnall: We understand that you commissioned a report from PWC last year into the costs and benefits of digital switchover in radio, but you didn’t publish it. We know, therefore, what we have learned from the Department for Culture, Media & Sport about what it said. It appears that it found, for example, that the benefits could – and I emphasise the word “could” – outweigh the costs by £437 million after 2026, but that conclusion is hedged about with quite a lot of caveats to do with what would have to happen in order for that good outcome to eventuate, and that if those things didn’t happen, then quite quickly you would get into a position where the costs would outweigh the benefits. Can you tell us a bit about that report? In particular, can you tell us why you haven’t published it? Do you think that, given what it appears to say – I choose my words carefully – about the constraints on potential for benefit, that it should have been available to inform the Government’s digital policy? ….. [edited]

Mr Peter Davies [Director of Radio Policy & Broadcast Licensing, Ofcom]: We were asked to commission it by the Government. We then commissioned it from PWC with a lot of input from various government departments and then submitted it to the Secretary of State.

Chairman: So you decided not to publish it.

Mr Stewart Purvis [Partner for Content & Standards, Ofcom]: …. [edited] On this particular occasion, it was decided in conjunction with the Department that work would be sent to the Department. Perhaps the most important thing is for Peter to respond to your characterisation of the work, but, in a sense, we have not hidden the piece of work. Indeed, I think it is now available to you. Is that right?

Baroness McIntosh of Hudnall: In, as they say, a redacted form.

Chairman: Just to be absolutely clear, the Department asked you to commission the work from PWC. Is that what you are saying?

Mr Purvis: They asked us to commission the work. Did they ask us specifically from PWC?

Mr Davies: Not specifically from PWC.

Chairman: The Department said to Ofcom, “Ofcom, you go and commission this particular work.” Is that the position?

Mr Davies: Yes.

Chairman: You then got the work which then came back to you and then you sent it to the Government and the Government said, “We’re not going to publish this in full.”

Mr Davies: I think they have certainly made it available to various groups. I think consumer groups have had it for some time.

Chairman: Fine. There will be no problem, therefore, in this Committee having the full report. …. [edited]

Baroness McIntosh of Hudnall: The thing that is slightly troubling – perhaps only to me, but a bit – is that when you see what appears to be evidence that the costs and benefits are, let’s say, finely balanced, or could be, that the drive towards digital migration, one might think, was driven more by the technology than by the needs either of the broadcasters or the consumers.

The Committee’s displeasure with Ofcom and the government was evident both in this exchange and in its subsequent report on digital switchover, published in March 2010, which stated:

“We strongly regret that the cost benefit analysis carried out by PricewaterhouseCoopers was not published at the time it was delivered to Ofcom and the Department for Culture, Media & Sport in February 2009.”

The government’s response to the Committee’s statement, published in June 2010, was:

“The Cost Benefit Analysis produced by PricewaterhouseCoopers, to accompany the work of the Digital Radio Working Group, was widely distributed amongst broadcasters and consumer representatives. However, there were technical difficulties which prevented the initial publication of the report on the DCMS website; these were rectified and the report published in February 2010.”

“Technical difficulties” for a whole year? As excuses go, this really takes the biscuit. It seems unlikely that the PWC report would ever have been made public, if not for the intervention of the House of Lords Communications Committee in January 2010 (first publication of the report’s findings was in this blog a few days later).

The PWC report did not offer the government the support for its digital radio switchover strategy that it had anticipated, so now it has to commission a further cost/benefit analysis which it hopes will produce a more favourable outcome. Is the government in a hurry to complete another study evaluating the supposed benefits of digital radio switchover? Hardly, judging by the evidence.

In June 2009, the government’s Digital Britain report had promised:

“We will conduct a full Impact Assessment, including a Cost/Benefit Analysis of Digital Radio Upgrade.”

In January 2010, Ofcom’s Peter Davies had offered evidence to the House of Lords Communications Committee:

Baroness McIntosh of Hudnall: What about your own impact assessment?

Mr Davies: We haven’t done an impact assessment yet.

Baroness McIntosh of Hudnall: But you have been asked to – correct?

Mr Davies: At some point in the future. I think the Digital Britain report said that we would be asked to do one, but we haven’t been asked to do one yet. Obviously we would need to do that and we would need a much fuller cost-benefit analysis before any final decision was taken.

Most recently, in June 2010, the government stated:

“We agree that a full impact assessment is an essential part of informing the Government’s decision on whether and when to move from a primarily analogue to a digital radio landscape. Work has already begun to collect the evidence needed to support an impact assessment and analysis should begin shortly.” [emphasis added]

Why bother with yet another report at this late hour in DAB’s history? Someone else has already done the sums. News International has just run its sliderule over the idea of launching a national digital radio station ‘SunTalk’ (a brand extension of its national daily newspaper ‘The Sun’) on the DAB platform. Its result was: DAB radio is not a viable commercial platform.

According to The Guardian: “News International management were considering extending the [SunTalk] station's reach by launching it nationally on DAB digital radio. But it is understood they baulked at the extra cost.”

If Murdoch cannot see a way to make a profit from a broadcast platform that is crying out for compelling content, then how exactly does any other content owner think it can make a financial return from DAB radio?

It’s the platforms Rupert Murdoch rejects ….

Ofcom’s DAB radio strategy: busy doing nothing, trying to find lots of things not to do

In June 2010, the government published its flimsy 5-page response to the House of Lords Communications Committee’s critical 279-page report on digital switchover that had been unveiled three months earlier. The response was a disappointing document that dismissed with little more than one sentence each of the Committee’s carefully worded recommendations, deduced after having considered hours and volumes of evidence.

One of the Communications Committee’s most forceful recommendations, in Paragraph 107, had concerned the necessary improvements to DAB reception:

“Given the importance for the Government’s plans for digital switchover of universal reception of the BBC’s national stations, it is essential that a firm and unambiguous plan and funding for the completion of build-out of the BBC’s national multiplex is put in place as soon as possible.”

The government’s feeble response to this issue was:

“In order to agree a plan for DAB coverage build-out, so that it can ultimately meet the current levels of FM coverage, Ofcom have been asked to form a Coverage and Spectrum Planning Group to make recommendation on the following:
• the current coverage of national and local radio on FM;
• changes to the current multiplex structure and frequency allocation; and
• what new infrastructure is needed so that DAB can match FM.
Ofcom are expected to present their recommendation to Government in Spring 2011.”

Surely it does not need yet another government committee to look into DAB? Had not these issues already been considered by the Digital Radio Working Group two years ago? By Digital Britain a year ago? By Ofcom? By anybody during the last decade of DAB underachievement?

Then I recalled a speech made by Ofcom Director of Radio, Peter Davies, to the Radio Festival in July 2008, in which he had set out his imminent workplan on the DAB issue:

"Increased coverage of DAB will be absolutely essential if it is ever to become a full replacement for FM for most services…… That brings us to the tricky part – defining what existing coverage is and how we improve it. This is still work in progress but we are approaching it in three stages. Firstly, we need to define what existing FM coverage is. That’s not nearly as simple as it might sound. Radio is not like television where you stick an aerial on the roof and you get reception or you don’t. Radio is used in every room in the house, usually with a portable aerial. It’s used outdoors on a wide variety of devices and it’s listened to in cars. So we need to look at geographic coverage as well as population coverage, and we need to look at indoor coverage in different parts of the house. FM coverage gradually fades as you move around, so we need to decide how strong the signal needs to be to be usable. And, surprisingly, this work has never really been done in any kind of consistent manner for the UK as a whole, so it has taken a little while to agree a framework and calculate the numbers.

Having done that, we then have to do the same for existing DAB coverage. Now DAB has all the same issues as FM, but it also has different characteristics. It doesn’t fade in the same way – you either get it or you don’t – so we need a different set of definitions here. 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 [government’s] Digital Radio Working Group final report later this year.”

This 2008 workplan seems to comprise precisely the same tasks that the government has just told Ofcom to start and complete by Spring 2011. So what happened? Was this work not done by late 2008, as Davies had promised? And if not, why not?

Improvements to DAB reception were considered a critical issue for consumer take-up of DAB radio … in 2008. Now, in 2010, they are probably the main factor likely to sound the death knell of DAB as a mass market consumer platform. So are we to assume that, in the intervening two years, work on this essential issue was never done, or was not completed, by Ofcom?

Why should consumers consider DAB radio to be anything other than a disaster if even our public servants appear to be busy doing little to fix the acute problems with DAB reception that the public has been rightly complaining about for years?

Digital radio switchover: talk is cheap, action will never happen

Politics is the art of flip-flop policymaking (and justifying it convincingly). This is evident in the new UK government’s first statement about DAB radio and digital radio switchover, published this week. What is its new policy? Well, there is no new policy. The Conservatives are simply continuing the previous Labour government’s ill-advised determination to foist digital radio switchover on an increasingly resistant public. A critic might even be so bold as to say of new Secretary of State for Culture, Media & Sport, Jeremy Hunt:

“The Government have ducked sorting out digital radio switchover…. They are giving Ministers the power to switch over in 2015, yes, but without taking any of the difficult measures necessary to make it practical or possible.”

But wait! In fact, these were the words of Jeremy Hunt himself, in April 2010, criticising his predecessor, Ben Bradshaw, during the previous Labour government. Now that the boot is on the Right foot, Hunt seems to have simply dusted off the Labour policy he had previously lambasted, crossed out Bradshaw’s name and written in his own instead.

In his same speech to the House of Commons, Hunt had been scathing about the digital radio switchover clause in the Digital Economy Bill:

“I think that clause is so weak that it is virtually meaningless, as it gives the Secretary of State the power to mandate switchover in 2015 but the Government have not taken the difficult steps that would have made that possible, such as ensuring that the car industry installs digital radios as standard [….] and that there is proper reception on all roads and highways. As a result, a lot of people are very concerned that 110 million analogue radios will have to be junked in 2015.”

That was ‘opposition’ Hunt then. Three months later, ‘government’ Hunt appears to see nothing problematic with the digital radio switchover clause. Indeed, the new government has committed itself to exactly the same fantastical strategy for DAB radio as the old government:

• digital radio listening will somehow reach 50% of the total by 2012
• someone somewhere will pay to upgrade the DAB transmission system to render it as robust as FM
• someone somewhere will launch lots of fab new digital radio stations
• consumers will somehow be persuaded to replace all six or more of their household’s radios with new DAB ones
• analogue radio transmitters will somehow be switched off in 2015
• all cars will somehow be fitted with DAB radios by 2015
• mobile phones and portable devices will somehow all suddenly include DAB, rather than FM, radio receivers.

All these objectives always had been, and still are, pure fantasy. None, and I literally mean ‘none’, of the available evidence and data demonstrate that these things will happen. Definitely not by 2012, certainly not by 2015, and probably never.

A year ago, Hunt was very clear in marking out his party’s strategy for digital radio as more realistic than the ruling Labour government’s:

“I think the most important thing is not something the government can do, but something the industry can do is, 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…..

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. … 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.”

So, between then and now, who is it that has convinced Hunt to backtrack and instead to endorse the status quo? The civil servants in his Department who hitched their wagon to the ‘DAB is the future’ train too long ago to let go now? The Ofcom radio staff who were appointed years ago on the strength of their promise to deliver digital radio switchover? The commercial lobbyists who still fantasise about the huge profits to be made (for Britain!) from global exports of their European DAB technology? All of them are nothing more than dreamers.

At the same time, many of these same parties are already distancing themselves from responsibility for DAB so as to save their own skins once DAB’s ‘fall from grace’ inevitably arrives:

• the government is saying that digital radio switchover depends upon the public’s take-up
• the regulator is saying that digital radio switchover depends upon the radio industry’s commitment
• the commercial radio industry is saying that digital radio switchover depends upon the BBC paying
• the BBC is saying that digital radio switchover depends upon its audiences
• the BBC Trust is saying that digital radio switchover depends upon the commercial radio sector’s commitment.

For years now, the stakeholders assembled around the table in those endless DAB committee meetings have been occupied identifying DAB’s problems yet, at the same time, every one of them has expected somebody somewhere else to fix them. But there is no sugar daddy out there. There is no cavalry about to ride over the horizon. It is you stakeholders who created such a mess of DAB and either you must fix it….. or throw in the towel.

This week’s announcement about digital radio switchover demonstrated that the new government does not have the guts to do what many, including the House of Lords Communications Committee chaired by Lord Fowler, had asked of them. To commission an objective analysis of why DAB was introduced in the first place, how close we really are to digital switchover, whether we will ever get there, what the costs have been to the radio sector to date, and to evaluate whether it is still worth pursuing these objectives thirty years after the DAB technology was invented.

Instead, the government has decreed that the present DAB unreality will continue … probably until one of these stakeholders eventually is forced by circumstance to kick the entire digital radio switchover issue into the long grass. In the meantime, the poor consumer is still on the end of misleading campaigns to persuade them that they will need to buy new DAB radios (which are mostly British), throw out their old radios (which are mostly foreign) and somehow get used to the sub-standard quality of DAB radio reception that most of us experience. No wonder they are asking in increasing numbers: ‘What was wrong with FM?’ And the correct answer is: ‘Nothing at all’.

This week’s government statement by Ed Vaizey, the new Culture Minister, was so woolly and vague that the media were able to write it up from wholly contradictory viewpoints.

“Government abandons 2015 target date for switching radio to digital signal,” said the Bloomberg News headline.

“Radio industry welcomes Tory backing for digital switchover in 2015”, said The Guardian headline.

Those two headlines cannot both be true. All the government has done this week is leave everyone more confused than ever. So why did it bother saying anything at all? A critic of Ed Vaizey’s announcement might be moved to say:

“We have got to be concerned that people will be ready before any switchover takes place and that there won’t be literally millions of analogue radios which suddenly become redundant. As you know, the government has set a provisional target date of 2015 and we are sceptical about whether that target can actually be met.”

But wait! In fact, those were the words of Ed Vaizey himself, in March 2010, criticising the then Labour government’s digital switchover plans.

Meet the new boss, same as the old boss.

DAB radio: a national platform that no one wanted

In 1998, the Radio Authority advertised a licence for the “first and only national commercial digital [DAB] multiplex licence.” There was no stampede of applicants. By June 1998, the regulator had to issue a press release with the headline “Radio Authority receives one application ….” The sole applicant was ‘Digital One’, 57% of which was owned by commercial radio’s GWR Group plc, whose chief executive Ralph Bernard later admitted:

“GWR was encouraged to apply for the national [DAB multiplex] licence and was under some pressure to invest in the opportunities for a national licence from the then regulator. Had we not done it, there would be no national DAB platform now. Not only that, [the regulator] did not know what they would have done on the question of national radio stations with regard to the opportunities given by the then government to renew their national licences for a further period of time if they were to commit to going digital. But how can you [do that] if there are no opportunities to go digital because there is no national multiplex? When I put that question to the Radio Authority, I was told that the answer was: ‘We don’t know what would happen – there is no Plan B’. It was just an assumption that someone would go for [the national multiplex].”

Bernard had a hard time convincing his own board that the DAB licence was a worthwhile investment for a radio group that, until then, had owned radio stations rather than transmission infrastructure:

“When we were seduced into believing that this was going to be the only [national DAB] licence, we realised that there would be substantial losses, but the payback would be when you have the opportunity to be the only player in the national market for DAB. When it’s the Radio Authority, an agency of government, you tend to believe what you are told. On that basis, the investment was justified and, at the time, getting it through my Board was not easy. Persuading shareholders, particularly the larger ones, was not easy.”

Now, twelve years later, GWR Group no longer exists, Ralph Bernard is out of the commercial radio business, but the ‘Digital One’ national DAB platform is still there. Nobody really wanted it in 1998, and nobody really seems to want it now. Its ownership has changed hands like pass-the-parcel, GWR Group plc having merged into GCap Media plc, which was then sold to Global Radio which, in 2009, sold its majority stake in Digital One to transmission provider Arqiva. How many millions were thrown at Digital One over the years by GWR, GCap and Global Radio will probably never be known.

The only thing cheap about Digital One was the cost of its initial 12-year licence, a mere £10,000 per annum paid to the regulator for the radio spectrum it uses. The business model was that Digital One would lease space on the DAB platform to radio stations that would pay it rent (about £1m per year, dependent upon audio quality). Since opening for business in 1999, many digital-only stations have tried using the platform but, to date, almost none have stuck around. No digital radio station has yet made a profit.

The latest additions to the lengthening list of stations that have failed to make the national DAB platform work for them are NME Radio and Panjab Radio, both of which quit Digital One in June 2010 (see shaded area of table). The reason? Almost no one was listening. Add together the digital-only stations broadcasting on the platform last quarter (and that are measured by RAJAR) and, in total, they accounted for less than 1% of total radio listening.

Yet the radio industry, the receiver manufacturers and their lobby groups are still spending money on campaigns to convince the public that DAB radio is a raging success. Digital One says its radio platform reaches “more than 90%” of the [UK] population,” equivalent to 46m adults. RAJAR tells us that 35% of those adults have a DAB radio. Yet only 226,000 adults per week listened to NME Radio, after nearly two years on-air. If you were in any way persuaded to believe the hype surrounding DAB, your business plan to start a digital radio station might look dangerously over-optimistic.

When NME Radio launched in June 2008, it had forecast that its audience would reach 396,000 adults per week by its second year. For most of its life, the station was broadcast on local DAB multiplexes (and online). Then, from 21 December 2009, NME Radio was made available nationally on DAB for an eight-month trial. Broadcasting to a much bigger potential audience, there should have been a positive uplift to the station’s performance in Q1 2010. However, there was no noticeable impact upon adult reach (226,000) or hours listened.

In its forecasts, NME Radio had projected that DAB would be “53%” by 2010. Maybe this referred to Ofcom’s forecast that, by year-end 2010, digital platforms (not DAB alone) would account for 50% of all radio listening. In fact, in Q1 2010, only 15% of listening to all radio was via DAB, and 24% was via all digital platforms (worse for commercial radio at 12% and 23% respectively). Ofcom’s forecast of how digital radio usage would grow was disastrously inaccurate. NME Radio did not stand a chance of commercial success using DAB.

The other digital radio station that quit the national DAB platform in June 2010 was Panjab Radio. Like NME Radio, it had broadcast via local DAB multiplexes (and online), but was then made available nationally on DAB for a six-month trial from 1 December 2009.

There was no lift to Panjab Radio’s audience in Q4 2009, but the following quarter saw a noticeable increase to 172,000 adult reach and 913,000 hours listened per week. This was almost twice the amount of listening that NME Radio recorded on the national DAB platform, a real achievement for an ethnic radio station.

The day Panjab Radio had joined the national DAB platform, Digital One operations director Glyn Jones said:

“Like Premier Christian Radio and UCB UK, Panjab Radio relied on a fund-raising appeal to pay for the launch of the station. It’s interesting to see the growth of listener-supported stations, and the way they’re extending the range and choice of stations on air via digital radio. These are stations that neither a traditional commercial model nor the BBC have chosen to provide, but which listeners value so much that they’re prepared to help pay for them out of their own pockets.”

The sub-text was that the Digital One national DAB platform cannot support a commercial digital-only radio station because the financial returns are simply insufficient to cover the expense for it to lease space on the platform. If Panjab Radio had managed to sell advertising at the average commercial radio sector rate, it should have generated £1m per annum of revenue. However, an industry study in 2009 found that the average digital radio station generated only £130,000 revenue per annum (and Panjab Radio attracted less listening than others).

When Panjab Radio quit the national DAB platform in June 2010, Digital One’s Glyn Jones issued a press release that seemed over-eager to deflect the blame:

“Panjab Radio's revenues come from a mix of traditional radio advertising plus fund raising among Britain's Panjabi and Sikh communities. Following a strategic and financial review the station opted to end its national transmissions but to continue to broadcast on DAB digital radio in three parts of the country with significant concentrations of the target audience - the West Midlands, West Yorkshire and London.”

As the table above demonstrates, the national DAB platform’s history is littered with commercial digital radio stations that failed to make it work for them. Most of the stations currently on the national DAB platform are non-commercial and so do not need to meet their costs from advertising revenues. But religious stations, army radio and unsigned artists do not come close to the mass market purpose for which the platform was originally envisaged. Did GWR Group make its substantial investment in national DAB in the expectation that, after a decade, the platform would be filled with subsidised radio stations attracting tiny audiences?

Two years ago, I had written:

“This sudden flowering of ethnic, religious and publicly-funded radio stations on the DAB platform echoes the fate of the ‘AM’ waveband in the 1990s … The ‘DAB’ platform of 2008, particularly in London, is already starting to resemble the ‘AM’ platform of 1998, suggesting that ‘DAB’ might have already been written off by the sector as a means to reach the ‘mass market’ audiences that national advertisers desire from the medium.”

Since then, this desperate filling of DAB multiplex capacity with non-commercial stations has spread from London to the national platform. Bizarrely, given the overwhelming empirical evidence that this “first and only national commercial” DAB platform is not working, even after a decade of operation, Ofcom is keen to create a second quasi-national DAB platform. Its rationale is that:

“This could help to facilitate the creation of national commercial radio stations to create a consumer proposition analogous to that of Freeview: a wide range of popular and niche services, delivered digitally” because “we believe DAB still offers the best solution for the future growth of radio in the UK.”

This nonsense was written in an Ofcom report less than a year ago, when the writing on the wall could not have been larger that the national DAB platform’s future for commercial radio was doomed. Surely, a regulator that refuses to deal with the reality of the here and now could be a regulator that will eventually find it has no future. For years, Ofcom (and its predecessor) have led the commercial radio sector a merry dance down a DAB blind alley that has proven almost fatal to the industry’s economic health.

If Ofcom publishes one more policy document proclaiming (as if it were still 1998) that ‘the future of radio’ is DAB, rather than it working to bang industry heads together to find a practical route out of the present mess, all it will succeed in doing is writing its own epitaph.

Choice FM R.I.P.: the birth and near death of licensed black music radio in London

31 March 1990 was the memorable day when London‘s first licensed black music station, Choice 96.9 FM, arrived on-air. Until then, the availability of black music on legal radio had been limited to a handful of specialist music shows, even though about half of the singles sales chart was filled with black music. The decision by then regulator the Independent Broadcasting Authority [IBA] to license a London black music station was part of a huge government ‘carrot and stick’ campaign to rid the country of pirate radio. On the one hand, new draconian laws had been introduced that made it a criminal offence even to wear a pirate radio T-shirt or display a pirate radio car sticker. On the other hand, the establishment knew that some kind of olive branch had to be offered to the pirate stations and their large, loyal listenership.

Many pirate stations, having voluntarily closed down in the hope of becoming legitimate, were incensed when the IBA instead selected Choice FM for the new South London FM license. Its backers had no previous experience in the London pirate radio business, but had previously published ‘Root’ magazine for the black community in the 1970s. Although it was impossible for one station to fill the gap left by the many pirates, Choice FM tried very hard to create a format that combined soul and reggae music with news for South London’s black community, which was precisely what its licence required. The station attracted a growing listenership and it brought a significant new audience to commercial radio that had hitherto been ignored by established stations. With Choice FM, the regulator succeeded in fulfilling two aspects of public broadcasting policy: widening the choice of stations available to the public; and filling gaps in the market for content that only pirate radio had supplied until then.

In 2000, Choice FM won a further licence to cover North London with an additional transmitter. For the first time, the station was now properly audible across the whole capital and had access to more listeners and more potential advertising revenues. Its listening doubled and, at its peak in 2006, Choice FM achieved a 2.8% share, placing it ahead of TalkSport and BBC London in the capital. Choice FM had no direct competitor in London, although indirectly some of its music had always overlapped Kiss FM. The station’s future looked rosy.

However, the Choice FM shareholders must have realised just how much their little South London station was worth, at a time when commercial radio licences were being acquired at inflated prices. Already, in 1995, Choice FM shareholders had won a second licence in Birmingham, but had then sold the station in 1998 for £6m to the Chrysalis Radio group, who turned it into another local outlet for its network dance music station Galaxy FM. At a stroke, the black community in Birmingham had lost a station that the regulator had awarded to serve them. Black radio in Birmingham was dead. The die was cast.

The then regulator, the Radio Authority, had rubber-stamped this acquisition, stating that it would not operate against the public interest. The Authority requested some token assurances: at least one Afro-Caribbean member on the station’s board; an academy for training young people, especially from the black community, in radio skills; and market research about the impact of the format change on the black community. None of these made any difference to what came out the loudspeaker. Birmingham’s black community was sold down the river.

Changes in UK media ownership rules were on the horizon that would soon allow commercial radio groups to own many more stations within a local market. As a result, in 2001, the UK’s then largest radio group, Capital Radio plc, acquired 19% of Choice FM’s London station for £3.3m with an option to acquire the rest. In 2003, it bought the remaining 81% for £11.7m in shares, valuing the London station at £14.4m. The Choice FM shareholders had cashed in their chips over a five-year period and had generated £21m from three radio licences. What would happen to Choice FM London now?

Graham Bryce, managing director of Capital Radio’s London rock station Xfm (which Capital had acquired in 1998 for £12.6m), said then:

"Our vision is to build Choice into London's leading urban music station, becoming the number one choice for young urban Londoners. Longer term, we intend to fully exploit the use of digital technology to build Choice nationally into the UK's leading urban music station and the number one urban music brand."

Capital Radio and subsequent owners seemed to want to turn Choice FM into a station that competed directly with Kiss FM (owned by rival EMAP). But they never seemed to understand that Kiss FM was now a ‘dance/pop’ station, whereas Choice FM had always been firmly rooted in the black music tradition of soul, reggae and R&B. Such semantics seemed to be lost on Choice FM's new owners and on the regulator, but certainly not on Choice FM’s listeners, who had no interest in Kylie Minogue songs.

In 2004, Capital Radio moved Choice FM out of its South London base and into its London headquarters in Leicester Square. The station’s final link with the black community of South London it had been licensed to serve was discarded. In 2005, Capital Radio merged with another radio group, GWR plc, to form GCap Media plc. In March 2008, Global Radio bought GCap Media for £375m. In July 2008, Choice FM managing director Ivor Etienne was suddenly made redundant. One of the station’s former founder shareholders commented:

“I’m disappointed that the new management decided to relieve Ivor Etienne so quickly. My concern is that I hope they will be able to keep the station to serve the community that it was originally licensed for.”

However, from this point forwards, it was obvious that new owner Global Radio had no interest in developing Choice FM as one of its key radio brands. In the most recent quarter, the station’s share of listening fell to an all-time low of 1.1% (since its audience has been measured Londonwide). Sadly, the station is now a shadow of its former self, even though it holds the only black music commercial radio licence in London (BBC digital black music station 1Xtra has failed to dent the London market, with only a 0.3% share).

This week, news emerged from Choice FM that its reggae programmes, which have been broadcast during weekday evenings since the station opened, will be rescheduled to the middle of the night (literally). One of the UK’s foremost reggae DJs, Daddy Ernie, who has presented on Choice FM since its first day, will be relegated to the graveyard hours when nobody is listening. From 2003, after the Capital Radio takeover, reggae songs have been banished from the 0700 to 1900 daytime shows on Choice FM. Now the specialist shows will be removed from evenings, despite London being a world centre for reggae and having more reggae music shops than Jamaica.

Station owner Global Radio responded to criticism of these changes in The Voice newspaper: “Choice [FM] has introduced a summer schedule which sees various changes to the station including the movement of some of our specialist shows.”

Once again, the regulator will roll over obligingly and rubber-stamp these changes. For Global Radio, the endgame must be to transform the standalone Choice FM station into a London outlet for its Galaxy FM network. At present, London-based advertisers and agencies can only listen to Galaxy on DAB or via the internet. A London Galaxy station on FM would bring in more revenue for the brand as a result of more listening hours and its higher profile in the advertising community. It would also provide a direct competitor to Kiss FM London (ironic, because Galaxy FM had been launched in 1990 by an established commercial radio group as an out-of-London imitation of successful, London-only Kiss FM). Global Radio’s argument to persuade the regulator will probably be that Choice FM’s audience has fallen to uneconomic levels. And whose fault was that?

Already, Global Radio’s website tells us that “Choice FM is also included as part of the Galaxy network” which “consists of evolving mainstream music supported by entertaining and relatable presenters.” And yet, according to Ofcom, Choice FM’s licence is still for “a targeted music, news and information service primarily for listeners of African and Afro-Caribbean origin in the Brixton area but with cross-over appeal to other listeners who appreciate urban contemporary black music.” How can both these assertions be true of a single station?

For the black community in London, and for fans of black music, this will be the final straw. Just as happened in Birmingham, the new owner and the regulator will have collectively sold Choice FM’s listeners down the river. Another station that used to broadcast unique content for a unique audience will have been wilfully destroyed in order to make it almost the same as an existing station, playing almost the same content. We have many commercial radio stations, but less and less diversity in the music they play. Radio regulation has failed us.

For Choice FM, the writing was on the wall in 2003 when Capital Radio bought the station and one (unidentified) former DJ commented:

“Choice [FM] was there for a reason [to be a black music station for black people], but that reason changed [since] 13 years ago. That’s why you’ve got over 30 pirate stations in London. If Choice FM kept to the reason why they started, you wouldn’t need all them stations. But Choice has become a commercial marketplace. They’ve sold the station out and they should just say they’ve sold the station out. What’s wrong with that? They have sold the station that was set up for the black community and they know they’ve done the black community wrong. But they’ve made some money and they’ve sold it. Why not let your listeners know?”

For me personally, as a black music fan and having listened to Daddy Ernie for twenty years, I am much saddened. In the 1970s and 80s, I had found little on the radio that interested me musically, so I listened to pirate stations and my own records. During those two decades, I actively campaigned for a wider range of radio stations to be licensed in the UK and, by the 1990s, I had played a direct role in making that expansion of new radio services happen successfully. Where did it get us? Now, years later, I have gone back to listening mostly to pirate radio and my own records (and internet radio). I am sure I am not the only one.

The radio industry and the regulator seem not to understand one important reason why radio listening and revenues have been declining for most of the last decade. They need to examine how, through their decisions, they have consistently sold down the river their station audiences and the very citizens whom their radio licenses were specifically meant to serve. Listeners vote with their ‘off’ buttons when station owners renege on their licence promises and the regulator lets them. Choice FM is sadly just one example.

In 2006, a lone enlightened Ofcom officer, Robert Thelen-Bartholomew, had asked at a radio conference:

“Is there room to bring the content of illegal stations into the fold? One way or another, whether we like it or not, we have a large population out there listening to illegal radio. Why do they listen? We are trying to find out. But, if you listen to the stations, they are producing slightly different content and output [from licensed stations]. Some of it is very high quality. Some of it is very interesting. So, what options are there for bringing some of that content into mainstream radio?”

Seemingly, none. The last FM commercial radio licence the regulator offered in London was more than a decade ago. Last year, when two small South London FM stations (one licensed for a black music format) were closed by their owner, the regulator unilaterally decided not to re-advertise their commercial radio licences (see the story here). A pirate radio station has not been awarded a commercial radio licence by the regulator for two decades.

Why do pirate radio stations still exist? Because, just as in the 1970s and 1980s, there are huge gaps in the market for radio content that – in spite of BBC radio, commercial radio and their regulators – remain unfilled. It is no coincidence that the share of listening to ‘other’ radio stations (i.e. not BBC radio and not commercial radio) in London is near its all-time high at 3.1%.

Farewell, Choice FM. I knew you well for twenty years.

And, irony of ironies, we are in Black Music Month.


[thanks to Sharleen Anderson]

The cost of upgrading DAB radio: why it will never happen

The current DAB radio transmission system in the UK is presently not robust enough to rival old fashioned, but more reliable, FM. All parties are agreed on that point. To get DAB up to FM standard, a huge amount of work needs to be done, which would cost a lot of money. How much money? Nobody seems to agree upon that point. Sums have been suggested in Parliamentary debates and in reports that vary wildly.

What information is in the public domain about the costs of DAB transmission? In the UK, not a lot. The BBC owns one of the two national DAB radio multiplexes, for which only a small amount of data about costs has been published.

By 2011, the BBC national DAB multiplex will cover 90% of the population at an estimated transmission cost of £11m per annum. The technical challenge of DAB is that you need more additional transmitters than FM (because of DAB’s characteristics) to improve coverage. To achieve 95% population coverage increases the cost of DAB to £38m per annum (the BBC said in 2008). To achieve 99% coverage increases the cost to £40m per annum (the BBC said in 2007).

Compared to the existing FM transmission system (which the BBC said in 2007 offered around 99% population coverage), DAB will be more expensive. Not at present, because DAB is only covering 86% of the population, but increasing that percentage to the same as FM will be costly for DAB. Very costly. By comparison, the existing national FM transmission network had cost the BBC £12m in 2007. This should have reduced to £10m in 2009 after transmission contractor Arqiva agreed to discount its existing contracts (following its acquisition of rival NGW). The same discount may have lowered the cost of existing DAB transmission agreements, but not of future contracts for build-out to 99% coverage.

The BBC broadcasts only four national stations on FM whereas, on DAB, it broadcasts more channels. How many more? The number of BBC stations on DAB varies because one station is part-time and because two full-time stations are proposed for closure next year. To take an example of a music station using 128kbps of DAB bandwidth, it would cost £1.6m per annum to cover 90% of the population, £5.6m to cover 95% and £5.9m to cover 99%. Compare that to a national FM station that currently costs the BBC £2.6m per annum. It seems that DAB may be cheaper at present, but is certainly not cheaper once it is required to achieve equivalent FM coverage.

The second national DAB multiplex in the UK is owned by Arqiva (formerly ‘Digital One’) and covers 90% of the population. Does it publish a price list for commercial customers wanting DAB carriage? Seemingly not. However, in September 2009, Premier Christian Radio had said it was paying £650,000 per annum for national DAB carriage, using 64kbps of spectrum. The pro rata cost for a 128kbps music station would be £1.3m per annum, close to the previously estimated BBC cost for population coverage of 90%. Arqiva says it "is working on a transmitter roll out plan to further extend coverage," having added four new transmitter sites in 2009.

In Germany, the transmission provider, Media Broadcast, has published a price list for commercial stations interested in broadcasting on its planned DAB platform. It anticipates that German stations will use the more spectrum efficient DAB+ system, whereas the UK is wedded to the older DAB system. The prices quoted below (in Euros) require a radio station to take a minimum 10-year contract and are based on two multiplexes operating at each transmitter location (if that were not to happen, the costs would be higher).

By 2015, Media Broadcast anticipates that its 110 DAB transmitters will provide coverage to 78% of the population indoors and 92% of the population outdoors. There seems to be no commitment in Germany for DAB to achieve the 95% to 99% population coverage that is planned in the UK. Nevertheless, the transmission cost of a (hypothetical) DAB station using 128kbps would be as high as E3.4m (£2.8m) per annum by 2021. As in the UK, the cost escalates rapidly as the DAB network is built out to reach more of the German population. Whereas, in 2011, the initial E0.6m (£0.5m) per annum might not seem prohibitive to cover a country that has a third larger population than the UK, that annual cost is multiplied six-fold by the end of the 10-year contract.

In both the UK and Germany, the cost of DAB roll-out to ensure that reception is as robust as FM will add significantly to the platform’s costs. Without this roll-out, DAB can never replace FM, and the burdensome cost of simulcasting on both DAB and FM will continue. With this roll-out, DAB seems to end up costing more than FM to achieve similar coverage. So what is the point?

In the UK, neither Ofcom nor the government’s DCMS department have published analyses of the costs of DAB roll-out. Their pursuit of the DAB platform has had absolutely nothing to do with the real world economics of the UK radio industry. Their numerous published reports and consultations deal with a virtual reality of the radio industry that exists solely in their minds, perhaps a reflection of the fact that none of them have ever worked in the radio sector they try to regulate.

Ofcom’s plans for upgrading DAB, to be published imminently, merely prolong the regulator's fantasy that the DAB platform is ‘the future of radio’. Ofcom’s apparent determination to run the radio industry into the ground economically through its insistence upon implementing a misguided ‘digital strategy’ for the sector has already proven a disaster, helping reduce the commercial sector's profitability to nil. Even more disastrous is the radio industry’s seeming inability to confront Ofcom collectively, to insist that ‘enough is enough’, and to demand that Ofcom goes back to the drawing board in its whole strategy for radio’s future.

How can Ofcom retain an ounce of credibility when it had forecasted publicly (as recently as November 2006) that digital platforms would account for 42% of all radio listening by year-end 2009? The actual figure was 21%. As a result, all those radio operators who had based their business plans for digital radio upon Ofcom’s ‘professional’ forecast have faced financial ruin. Instead of reaching for the tissue box, these businesses should be reaching for their lawyer.

Practical action is what is needed now, not yet another Ofcom fantasy plan for radio’s DAB future.

Commercial radio revenues: always look on the bright side of less

Last week’s press release from the Radio Advertising Bureau was ecstatic about the commercial radio sector’s revenues. It told us that, in 2009, radio’s share of total display advertising had increased to 5.9% from 5.8% the previous year. It told us that this was the radio sector’s first growth in share since 2004. It told us that this was “terrific” news:

“To see the first annual share growth for five years, during the worst recession in living memory, is a terrific achievement for the commercial radio sector, and one that is unmatched by any other traditional media. It is a strong signal that the sector has turned a corner and not only halted decline, but moved into renewed growth, and is further evidence that the commercial radio industry’s on-going investment into programming, talent and marketing is paying dividends in both audience and revenue performance.”

I was stunned by this fantastic success story. So stunned that I had to check the industry’s own revenue numbers to make sure I had not been mistaken. A quick look at the figures reminded me of what I had thought I already knew. In 2009, commercial radio revenues had been down 10% year-on-year. That is ‘down’ as in ‘less’, not ‘down’ as in ‘more’. The only reason that radio’s share of all media display advertising increased at all in 2009 was that, whilst radio lost 10% of its revenues, media in aggregate lost 13%. In other words, radio’s performance in 2009 was less worse than the average. This is much like boasting you are top of a school remedial class.

The Radio Advertising Bureau press release tried to position radio’s revenue performance in terms purely of cyclical ‘credit crunch’ factors. In fact, commercial radio’s problems with revenues are largely structural and started in 2005 (see graph), well before the ‘credit crunch’:
• 2009 revenues: down 10% year-on-year
• 2008 revenues: down 6% year-on-year
• 2007 revenues: up 3% year-on-year
• 2006 revenues: down 5% year-on-year
• 2005 revenues: down 4% year-on-year

As a result, radio revenues, which totalled £505.5m in 2009, are now:
• At their lowest level since 1999
• At their lowest level, in real terms, since 1997 (adjusted for inflation)

It is difficult to understand how commercial radio’s largest ever year-on-year revenue decline gives “a strong signal that the sector has turned a corner and not only halted decline, but moved into renewed growth”, as the Radio Advertising Bureau would have it.

It would be great to see the commercial radio sector give a “strong signal” that it has turned a corner, any corner. But sector revenues are falling in the long term because the volume of listening to commercial radio is declining in the long term, having peaked in 2001 (see graph). Less listening inevitably leads to lower revenues.

Worse, not only are commercial radio revenues and listening both going down, but the amount of money the sector is able to generate from each 1,000 hours of radio listening is also going down. In real terms (adjusted for inflation), commercial radio's 'revenue yield' fell to £23 per 1,000 hours in 2009, which is where it had been in 1997 (see graph). This is probably the outcome of fewer radio advertising spots, or lower radio advertising rates, or a combination of both. Reduced yields inevitably lead to lower revenues.

To combat these structural issues, the major challenge for the sector must be to attract more listening to commercial radio. That will require a strategy that is pragmatic and focused on listener needs. Pumping out press releases that try to gloss over the commercial radio sector’s largest ever year-on-year revenue decline with phrases like “terrific achievement” is part of the problem, not part of a solution.

The DAB radio scrappage scheme – much too little, much too late

The BBC started DAB radio transmissions in the UK twenty years ago and then, ten years later, DAB was implemented commercially. During all that time, DAB radio has failed to ignite the interest of most British consumers. Neither has this European technology been successfully exported to all corners of the globe, as had been anticipated. Countries where DAB is working commercially can be counted on one hand. The end result – warehouses full of unsold DAB radios, billions of pounds of investment unlikely to ever show a return, apathetic consumers and potentially disgruntled venture capitalists.

The one-month DAB ‘scrappage’ scheme announced this week smacks of desperation. In 2009, fewer DAB radio receivers were sold than in 2007. Consumers have voted with their wallets and remain unconvinced. This downward sales trend started before the credit crunch but no action has been taken to stop it. The window of opportunity for DAB radio mass market take-up would seem to have come and gone.

During the first decade of DAB, a scrappage scheme would have been unthinkable. All parties involved in launching DAB were too busy rubbing their hands at the very anticipation of the profits that would be coming their way. High-priced DAB receivers, monopoly control of DAB airwaves and cheap, DJ-free jukebox digital radio stations. You could almost see the pound signs in the eyes of DAB stakeholders.

How times have changed. The DAB radio industry is now a salvage operation. It is a passé technology and the current objective is simply to shift as many of those brick-shaped DAB radios out of storage warehouses as possible, almost at any price. The present period before DAB is finally pronounced DOA is time limited. After that, DAB radios will become the Tamagotchi of the broadcast sector.

The most damning part of all this is the boldness with which the radio industry is still prepared to foist a technology on the public that, in many listening situations, is so technically inadequate. Instead of fixing the problems with DAB reception (which would cost a fortune), the industry just persists in maintaining its stance that DAB radio is fine. But trying to dupe your customers (particularly when radio is the most ‘trusted’ medium, according to Ofcom) must be counterproductive. Crime doesn’t pay if your business model requires loyal listeners.

Just as damning is the industry’s refusal to accept that it is ‘content’ that drives radio listening. Why would anyone buy a relatively expensive DAB radio when it offers so little content over and above what can already be accessed via AM/FM, digital TV, mobile phones and the internet? Commercial radio’s closure of most of its digital stations, followed this year by BBC proposals to axe two of its digital stations, hardly inspire consumer confidence in DAB.

Complicit in this is the radio industry’s willingness to endorse DAB radio set manufacturers’ increasingly desperate measures to shift their products. Pure, the biggest UK brand of DAB radio receivers, is circulating a booklet for consumers to pick up in-store that purportedly “dispels digital radio switchover myths”. Rather than itemise all of the booklet’s assertions that are either untrue (“AM services will either move to FM or to digital only”) or which distort the truth (“Digital radio … crystal-clear, interference-free listening”), I suggest you read it yourself here.

On the one hand, it will make you laugh with incredulity. On the other hand, if you love the radio medium, it will make you cry. Sorry, but when exactly was it that snake oil salesmen took over this industry?