The great FM radio switch-off: Don't Panic!
The media's media dept got Carter completely wrong
Digital Britain Media sections of newspapers are usually the weakest, and you can guess the reasons why. It's an institutional thing. Because of a gentleperson's agreement that they'll never dish the dirt on each other, the real stories are buried - you'll be lucky if the occasional one washes up in Private Eye.
Nor is it a hindrance if a reporter understands neither business or technology; you can still be a media expert, and one day, most correspondents dream of one day being a media executive. Or at least a consultant. So, naturally, the Emperor is always wearing the finest threads.
But rarely have the massed ranks of Media Correspondents ever got it so badly wrong as they did with the radio this week.
Radio analyst Grant Goddard points out that contrary to media reports, there's no mention of an analogue switch-off in the Carter report, and no edict to close down analogue transmission. It's merely an inference, based on some wishful thinking. Carter has kicked the radio crisis back onto the industry. As one broadcaster told us:
"The attitude is a plague on all your houses, it's sort your shit out. It's not really our problem. Radio is left with a lot of problems unresolved, but the key thing is there's no money to pay for any of the goals."
So why were we reading about the largest mass obsolescence of technology ever seen in Britain this week? Let's have another look at what Lord Carter's report really said.
In paragraph 9 of Chapter 3b ("Radio Going Digital") the report states:
At the heart of our vision is the delivery of a Digital Radio Upgrade programme by the end of 2015.
OK, that's a target date for the achievement of an aspiration. But what's he aspiring to, exactly?
On that date all services carried on the national and local DAB multiplexes will cease broadcasting on analogue. At the same time, a new tier of ultra local radio... will occupy the vacated FM spectrum. Radio services will either upgrade to DAB or if they are within the ultra-local tier, to FM. This will deliver an upgrade from FM to DAB and from MW to FM.
That's clear enough. Carter wants major broadcasters off analogue. He wants a date - his own preferred is 31/12/2015 - and he wants this date (whatever it may be - note the uncertainty already creeping into the details) to be announced two years ahead of time. But he points out that this should only be approved if he criteria set out by the DRWG (Digital Radio Working Group) has been met. Which is:
- 50 per cent of listening is digital [not the same as DAB, note]
- DAB is comparable to FM coverage, and local DAB reaches 90 per cent of all population, and all major roads.
This may or may not happen in time for that aspirational end-of-2015 date, we'll return to that in a moment.
Then there's a scary threat to terminate licences - inviting us to infer that any analogue hold outs will be hunted down, rounded up and shot. In Paragraph 43 Carter states:
"... we will introduce new legislation which will insert a two-year termination clause into all new licences."
And Paragraph 44 appears to reiterate the same point:
"If by the end of 2013 it is clear the Digital Upgrade timetable will not be achieved, we will use the powers, set out above, to terminate licences and the existing licensing regimes will apply"
But to understand this, you need an insight into the complex and expensive way Ofcom grants radio licences.
There are four tiers of license, all fixed-term, and varying slightly in the fundamentals. But what most share in common is an incentive - a bribe or sweetener, if you prefer - for analogue broadcasters to adopt DAB. When licences come up for renewal, either a sealed bid auction or a beauty pageant determines the winner. (They can also be traded, but let's leave that to one side). Ofcom promised automatic renewal of the analogue licence if the broadcaster took up a DAB license.
This is something of a curse, given that making a DAB commitment costs money - whether you're choosing to beam into selected regions, or launch a national station on the DAB multiplex. In the case of the latter, that's a cool million quid a year on Arquiva. Combine that with low audiences, and you have a problem. At one nationwide DAB station, apparently, delivering the programmes costs more per-listener hour than prime time BBC 1 TV costs per-viewer hour.
(This is not, you'll have guessed, a commercial operator).
Last year the biggest commercial player Global decided it was bailing out of DAB, and the most interesting potential newcomer in years, a consortium led by Channel 4, decided it wasn't entering the market. C4 had planned 10 stations going up against the BBC. DAB carriage costs - and the low audience digital attracts - proved the clincher.
The termination threat merely cancels the automatic rollover renewal.
A voluntary digital switchover?
Now we've established that it's an aspiration, what are the chances of this wish coming true?
At this point we should note a slippery distinction familiar to observers of the radio business. DAB is not the only digital game in town. 37 per cent of digital listening isn't on a DAB set. There's internet radio, and any digital "switchover" doesn't necessary mean mandatory DAB. In fact, given the lack of financial support for DAB, IP-based radio is the big winner in the Carter report.
Let's have a look at the market penetration. Ofcom estimates there are 120 to 150 million analogue radios in the UK. Cumulative sales of DAB-capable sets, are 9 million, short of predictions, and growing by around 2m a year. Even accounting for DAB listening it's barely limped into the 20 per cent penetration range. Sales are flat-lining, and even fell in the 2008 Xmas shopping season, year-on-year.
DAB is absent from two vital areas, cars and mobile phones, and while Carter ignored mobile radio completely, he explicitly targeted car manufacturers. The government promises to "work with manufacturers so that vehicles sold with a radio are digitally enabled by the end of 2013".
This is a challenge. The DAB lobby's Digital Radio Development Bureau said yesterday that the majority of Ford cars are already available with DAB as an option. It's just not an option many people are choosing.
And here, Britain's strange insistence on maintaining its own flavour of digital radio deters manufacturers. The few other countries (including Denmark) to adopt DAB have already announced migration strategies to DAB+, or are about to. By 2013, we could be the only country left. This is not good considering economies of scale.
This illustrates the scale of the challenge:
There are 30m vehicles on the road - there's a long, long way to go.
But the biggest reason why the aspiration won't be met is right there in the Report: the 50 per cent trigger. Even if the magic number was met, neither the BBC, nor commercial broadcasters, would want half their audience to disappear overnight. Audience falls of 10 per cent are considered disastrous.
So what analogue switch-off?
As Goddard pointed out here at El Reg when the DRWG findings were published in December, that isn't going to happen, a point he re-emphasises today:
"Not in my lifetime," says Goddard, whose full analysis on Carter can be found here.
Carter's team gambled that the average media correspondent can speed read, but has an attention span no longer than a Twitter post - a good bet, as it turned out. ®
Andrew warmly welcomes your comments