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In the ditch with DAB radio

We're different - right hand drive cars, sterling, DAB...

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Analysis In 2008, the wheels fell off the DAB digital radio platform. Last week, after a year of deliberation, the government’s Digital Radio Working Group concluded that outdated DAB technology should be the sole broadcast platform for UK radio, irrespective of global market conditions or the impractical cost of its implementation. Whilst nobody would argue against a digital future for radio, the Group's particular and peculiar vision of that digital future is more contentious. It recommends that existing FM and AM transmitters should be switched off, to be replaced by DAB, once radio listening has passed a threshold of 50 per cent via digital platforms. However, there are a number of challenges that would need to be overcome before such a plan could be realised.

Paradoxically, the greatest obstacle is that the UK’s existing FM analogue radio transmission system already provides amazingly robust radio reception to 99 per cent of the population. Thanks to the Herculean efforts since 1955 of BBC engineers who constructed 230 transmitter sites across the UK, an almost ‘universal’ radio service is available to listeners. When commercial radio launched in 1973, its FM rollout simply duplicated the infrastructure already operated by the BBC.

In television, the imperative for digital switchover was to offer consumers a wider choice than the maximum five channels available nationally on analogue, and the lure was significant revenue for the Treasury from an auction of valuable spectrum. However, in radio, the existing analogue spectrum is already sufficient to offer many more services than TV (32 stations in London, local and national), while Ofcom research finds that most consumers are satisfied with their existing choice of radio stations. Neither does the AM nor FM spectrum hold value for the Treasury, as much is likely to be re-assigned to non-profit community radio services.

For commercial radio, the Working Group’s recommendation that it invest in launching further digital-only services to attract listeners to the DAB platform would only exacerbate the sector’s precarious financial situation. In fact, 2008 witnessed the closure of many digital radio brands – TheJazz, OneWord, Core, Virgin Radio Groove, Capital Life, Mojo Radio – that had already failed to generate sufficient audiences or revenues. Ratings for existing analogue ‘heritage’ stations are declining, and sector revenues were falling even before the Credit Crunch, making it impossible for the commercial radio sector to divert more resources into new digital ventures.

In terms of UK market penetration, nearly a decade after the DAB platform launched, only a minority of consumers are demonstrating an interest in purchasing DAB radio receivers. 79 per cent of new radios sold during the last 12 months were analogue rather than DAB, and the decade-plus lifespan of the average radio makes the natural replacement cycle slow, particularly when a typical household owns six radios. The Working Group’s expectation that, by the end of 2010, unit sales of DAB radios will exceed those of analogue radios looks very unlikely.

Even amongst the minority of consumers who own DAB radio receivers, the majority of their listening via digital platforms is to stations they can already receive on analogue radio. Only 27 per cent of commercial radio listening via digital platforms (DAB + digital TV + internet) is to digital-only stations, a proportion that has declined during 2008 as many digital-only brands have closed.

Data from the same RAJAR survey shows that in-car listening accounts for 20 per cent of total radio usage in the UK, though DAB radios remain a rarity in cars. In 2007, 2.4 million new vehicles were registered in the UK, of which around a third offered the option to include a DAB radio as a standard ‘line-fit’ or as an optional extra. Yet only 20,000 buyers chose to install a DAB radio. It is estimated that, out of 34 million cars on the road in the UK, only 170,000 to 200,000 presently have DAB radios fitted.

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