Original URL: http://www.theregister.co.uk/2011/04/05/corporate_welfare_fm/

Dig deep! Radio asks taxpayers for blank cheque

You'll have to pay for more DAB - we can't afford it

By Andrew Orlowski

Posted in Media, 5th April 2011 14:49 GMT

Timing is everything, comics say. So it is in politics, too. With the UK flat broke after Labour's nine-year drunken spending splurge, the taxpayer is now being asked to pay for lots of new radio masts, and associated infrastructure.

The anointed successor to analog radio doesn't have anything like the infrastructure required to match analog's coverage, and neither the BBC nor commercial broadcasters want to spend any more than they have already committed over the years.

So, dear taxpayer, that means you. This requires "massive public funding" according to one broadcaster today. Read on for some interesting new figures, and the first signs of creative rule-bending to meet the switchover requirement - all gleaned from a very lively Westminster Forum on Digital Radio this morning.

The radio industry's appeal for funds is unprecedented not just because the timing is awful. It's also unusual for another reason: the industry is asking for a blank cheque.

Nobody has published an independent analysis of how much the additional digital radio infrastructure will cost to achieve certain coverage thresholds. (The DAB industry claims coverage is now 86 per cent national coverage for BBC digital channels and 90 per cent for commercial channels - and much lower for local.) So much for "evidence-based policy making".

So far we only have the word of mast monopoly Arqiva, which has a horse in this race, having acquired the Digital One DAB multiplex in 2009. It's hardly an unbiased source. While Ofcom's director of radio Peter Davies is supposed to be working on this, until he reports, we only have best-guesstimates.

The radio industry again pressured culture secretary Ed Vaizey for funds last week - talks have stalled for a year now - but he isn't inclined to budge. In today's climate - with household income set to fall for the first time in 30 years - which politician would be?

Today, speaking at a Westminster Forum event, Arqiva's radio chief Paul Easton hazarded a figure: £100m, he said. But I've heard much higher estimates required to bring DAB up to FM coverage, which start at the astronomical and go up from there. Given the UK's finances, £1bn isn't going to fall out of the sky onto an industry which has made a mess of its digital strategy.

So the debate has stalled for a year over who should pay the costs. Last week culture minister Ed Vaizey hosted a summit for the various parties. Unfortunately for the radio chiefs, Vaizey is perhaps the minister least likely to approve of corporate welfare for media workers. And if he viewed it as a matter of national priority, something would have been conjured out of last October's license fee settlement, which fixed BBC income for the next six years. It wasn't.

The people at the top of the radio industry seem to be in a strange denial about digital radio. CEO of trade body RadioCentre Andrew Harrison touted a new DAB station this weekend - Radio 4 Extra. But it's simply DAB stalwart Radio 7, rebranded.

Ford Ennals (who is not a car, but chief executive of DAB trade group Digital Radio UK), proclaimed that "the programme [for switchover] was on track", added that he could "certainly see [listenership criteria] being met in the next five years" - before concluding "the future for DAB is very bright."

Yet that message was undercut by a succession of commercial broadcasters.

Absolute Radio's strategy head Adam Bowie warned that "the most dangerous thing is ignoring consumers and driving down cul de sacs" and said "hybrid radios" - meaning FM, DAB and Internet - were "going to be key". Absolute already delivers 65 per cent of its broadcasts digitally, but he pointed out the largest growth is in internet streaming. Bowie saw promise in IP-delivery for high-quality streaming that neither FM nor DAB were able to deliver, and commercial targeted 1:1 advertising of the type Spotify had used.

Jimmy Buckland, his counterpart at UTV Media, which owns Talksport and a dozen locals, also had some interesting observations. He said the future of DAB was assured… but "as a secondary platform" and there wasn't the investment case to spend more on DAB infrastructure. Like Bowie, Buckland said there was little business case for large expenditures on more DAB infrastucture.

Travis Baxter, external affairs director for Bauer, said we "still don't understand what the consumer pull is; or that the push about DAB can really be achieved without massive public funding." DAB was an "uphill struggle", he said. Three years ago we would have found the same broadcasters bullish about DAB - and thoughts of describing it as a "secondary platform" were unthinkable. Not any more.

The day began with a heated debate by some of DAB's fiercest critics. Jack Schofield, formerly of The Guardian, reminded the audience of what a successful technology looks like. It looks like the web, or the iPod, or a PlayStation. DAB is as old as the web, he pointed out, but not a successful technology.

"iPod owners spend £600 a year, and thousands on HDTV. They're not staying away from DAB because of cost, because of £50 sets," he said. He recalled the outcry when the BBC wanted to close Radio 4's Long Wave transmissions - it remains the only broadcaster on Long Wave. This would be nothing compared to inconveniencing 50 million people and making 200 million sets obsolete.

"I would love digital radio to be done properly but we need a rational strategy for 2020," he said. FM receivers continue to outstrip DAB sales - FM was cheap and ubiquitous.

There was a small explosion in response from Frontier Silicon founder Anthony Sethill. Frontier makes most of the chipsets for DAB. He said he was furious that pundits such as Schofield were bullying the public, he said.

He claimed that figures in the presentation were from GfK, and could not be considered accurate because Dixons didn't disclose its figures, it had to estimate them by panels intead. Frontier had sold two million chipsets last year - indicating GfK had undercounted DAB receiver sales.

Schofield gave as good as he got, pointing out that if anybody was doing the browbeating it was the radio industry, the BBC and the DAB lobby. Over 20 ad campaigns have been launched in the last decade to convert people to DAB. And yet here we are.

The figures Schofield used, we later found out, come from Digital Radio UK - the DAB's lobby group.

Mark Rock, CEO of AudioBoo, was also critical, and berated the industry for forgetting that technology was a means not an end. The end was great radio programming.

"This is the only industry going digital with a technology that's more expensive and lower quality," he said. The industry was ignoring presentation, creative programming, and lost opportunites.

Learning from Sky could be instructive, he said, as it sold a platform and kept a close relationship with users for the lifetime of the device.

This left radio veteran Daniel Nathan, who has been one of DAB's strongest critics, trying to take the heat out of the debate.

"For some services DAB is very effective and well received," he said, "especially where listeners are older and more affluent.

"These are very important listeners to have, advertisers like them. But for younger listeners, who might listen to 1Xtra, or Gaydar, or Rinse FM, there was negligible DAB takeup."

Goalposts on wheels?

Later, Nathan noticed what he might be a shift in the digital listening required to trigger a timetable being set. Recall that Carter's Digital Britain report of 2009 set a threshold of 50 per cent digital listening (not DAB listening) and where DAB coverage "is comparable to FM coverage, and local DAB reaches 90 per cent of the population, and all major roads".

Buckland said the target being negotiated - and it's a bargaining chip - appeared to be 90 per cent of FM coverage - which is not the same thing as 90 per cent of population coverage, you'll note. He confirmed this was the case. For local coverage the thresholds also appear to have been put on wheels, and moved around: and local DAB coverage would be "aggregated" to average 90 per cent, so in many areas local broadcasts would reach fewer than 90 per cent.

It gets better by the day. Or worse. ®