Original URL: https://www.theregister.com/2008/12/29/grant_goddard_drwg_analysis/
In the ditch with DAB radio
We're different - right hand drive cars, sterling, DAB...
Posted in Legal, 29th December 2008 12:58 GMT
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 Last week, after a year of deliberation, the government’s Digital Radio Working Group concluded that outdated DAB technology should be the sole broadcast platform for UK radio, irrespective of global market conditions or the impractical cost of its implementation.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.
Bypassed by new technology?
Furthermore, although 37 per cent of radio listening takes place outside of the home, not a single model of mobile phone available in the UK incorporates DAB radio. Whilst an increasing proportion of audio listening is now taking place ‘on the move’, the DAB platform will not benefit from the strategies of global mobile ‘phone manufacturers to incorporate FM radio and/or Wi-Fi connectivity within their devices.
For many users, the present DAB signal proves insufficiently robust for good reception in built-up areas, in basements, or on public transport. The DAB technology was implemented so as to optimise in-car reception with an externally mounted aerial, even though cars have proven to be DAB’s least used listening environment. As a result, in-home listening of DAB is not as robust as for FM, resulting in complaints from users of ‘burbling’ audio.
In terms of spectrum efficiency, broadcasters’ usage of existing DAB frequencies is not particularly efficient because the UK system uses the ‘MPEG-1 Audio Layer 2’ codec developed in the 1980s. Although more efficient codecs have been developed subsequently, and are being implemented in other countries under the ‘DAB+’ system, the UK is unlikely to make such a switch because the majority of the 7 million DAB receivers sold to date are not upgradeable.
To address some of these inadequacies, the Working Group’s report recommends that a significant upgrade of existing DAB transmission networks is necessary to make reception as robust as already exists for FM. However, the report sidesteps the immense costs that would be involved. For example, the BBC’s national DAB multiplex presently costs £6 million per annum for a network of 96 transmitters that cover 86 per cent of the UK population. To increase coverage to 99 per cent would require 1,000 transmitters, increasing the cost significantly to £40 million per annum. Whereas the BBC operates only one national DAB network, the commercial sector runs a national DAB network, an almost national patchwork of local DAB multiplexes, and additional regional multiplexes in built-up areas. The costs to the commercial sector of upgrades to all these transmitters would prove prohibitively expensive.
Propping up the cartel
Faced with these challenging infrastructure and cost issues, the Working Group’s insistence that the DAB platform must replace AM and FM radio broadcasting, by a target date of 2017, seems dogmatic rather than practical. However, the Group’s insistence that “the [UK] radio industry must have greater certainty and control of its future” explains its determination to implement the DAB platform, seemingly at almost any cost, in order to sustain the existing British radio broadcasting system.
At a global level, IP-delivered audio (‘internet radio’) is much more likely to become the main platform for digital radio in the long term, as a supplement to existing FM analogue radio broadcast systems in each country. However, the UK seems as determined as ever to plough a different furrow. Just as we already have right-hand drive cars, pounds/ounces and sterling instead of Euros, we can now add ‘DAB’ to our esoteric list.
Why the determination to go it (almost) alone? Possibly because the DAB platform offers our existing UK radio monoliths, the BBC and commercial radio owners, one final opportunity to maintain their ‘control’ over the radio content we listen to in this country. Remember that the content gatekeepers of the DAB platform are the BBC and a cartel of the largest UK commercial radio groups (not Ofcom), both of whom have already invested huge sums building their duopolistic DAB infrastructure over the last decade. Whereas the internet radio platform opens up the UK radio market to competition from unregulated content produced in all parts of the globe, DAB ensures that we continue to listen to carefully regulated content produced in the UK, and that we listen on uniquely expensive DAB radios made by UK manufacturers for our relatively small UK market.
In this way, the UK-centric, protectionist, policies recommended by the Digital Radio Working Group would seem to benefit large UK broadcast stakeholders….. but not the consumer, who will be expected to replace all six analogue radios in their home by 2017. ®
Grant Goddard has developed and implemented launch strategies for groundbreaking radio stations including Kiss FM (London), Radio City (India) and Radio Juventus (Hungary). He advises on business strategy, regulatory issues and content.