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Digital Radio Working Group Interim report…
Tags: barry cox, culture media, digital migration, digital platforms, digital radio, independent chair, interim report, introduction 1, landscape, mechanisms, radio industry, route map, secretary of state, spectrum, working group,Pages: 13
Language: english
Created: Mon Jun 23 10:28:12 2008
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Digital Radio Working Group
Interim report for the Secretary of State for Culture, Media and Sport
A report prepared by Barry Cox, Chair of the Digital Radio Working Group
Published by Department for Culture, Media and Sport
June 2008
DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
SUMMARY OF CONTENTS:
1. Introduction
2. Digital Radio `The Facts '
3. Barriers to Growth
4. The Future Landscape
5. Digital Migration
6. Route Map to Digital and next steps
Annex A Membership of the DRWG
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
1. INTRODUCTION
1.1. The Digital Radio Working Group, hereafter referred to as DRWG,
was established in November 2007 by instruction of the Secretary of
State for Culture, Media and Sport. Its purpose was to bring together
senior figures from the radio industry and related stakeholders
(membership of the DRWG is detailed in Annex A of this document),
under an independent Chair, to consider three questions:
· What conditions would need to be achieved before digital
platforms could become the predominant means of delivering
radio?
· What are the current barriers to the growth of digital radio?
· What are the possible remedies to those barriers?
The DRWG was asked to report its findings to the Secretary of State by
the end of the 2008.
1.2. As part of its first phase of work the DRWG established four sub-
groups to consider the following issues: Technology and the
Consumer Proposition; Spectrum Planning; Manufacturers; and
Mechanisms for Growth. These groups were formed with a wide
membership from across the sector, associated industries and
consumer representatives with some groups consulting widely on their
considerations, with the intention of presenting recommendations to
the DRWG by the end of April.
1.3. The findings and recommendations from three of the sub-groups
(the work of the Spectrum Group is continuing) were accepted by
DRWG at its meeting in May. At that time the DRWG agreed to
submit an interim report to the Secretary of State rather than wait until
the end of the year. The purpose of this report is to set out:
· an agreed vision for the future of radio in the UK;
· a number of interim recommendations for Government, Ofcom
and industry to consider;
· an outline of future work; and
· to provide an opportunity for wider debate on the initial findings
of the DRWG.
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
2. DIGITAL RADIO - `THE FACTS'
2.1. The UK is a market leader in the development and take-up of digital
radio. Listeners can listen both to their favourite stations and to
thousands of new ones across a range of platforms including Digital
Television, the internet, satellite and DAB.
2.2. Recent figures suggest that many listeners are taking advantage of
these new services. RAJAR's first quarter 2008 figures show that
digital listening now accounts for at least 1 17.8% of all radio listening; a
growth of nearly five percentage points 2 in nine months. DAB is the
most popular digital platform accounting for around 11%, listening via
digital television is 3.2% and the internet at 2.1%. The reach of digital
platforms is also on the increase rising from 28.4% (Q3, 2007) to
31.4% 3 (Q1, 2008), with DAB representing around 17.9% of reach,
DTT 10.5%, 6.2% the internet and 7% to unspecified digital platforms.
2.3. The take-up of DAB digital radio over the last few years has been
impressive. By the end of May this year sales of DAB sets exceeded
7 million, with this figure predicted to rise to 9 million by the end of the
year. As a result 27% 4 of all adults live in a DAB household, projected
to increase to about 30% 5 of households by the end of the year.
2.4. Recent figures from GFK, show that despite consumer confidence
being at its lowest since 1992 consumer electronics has achieved a
9.5% 6 growth in the last year, with sales of DAB devices outperforming
the rest of the consumer electronics market.
1
Source: Rajar notes 9.5% of listening is not specified by platform
2
Source: Rajar Q2 2008
3
Source: Rajar Q2 2008
4
Source: Rajar Q1 2008
5
Source: DRDB Five year forecast press release 21 September 2007
6
Source: DAB `The True Story' GFK presentation May 2007
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
3. BARRIERS TO GROWTH
3.1. Whilst the growth of digital radio in the UK has to date been
encouraging, we believe there are a number of barriers which threaten
the future growth of the market. These barriers are described below.
Transmission Costs
3.2. Listeners are increasingly expecting access to radio services via a
number of platforms and devices. However, for analogue
broadcasters carriage across a number of platforms represents a
significant increase in their fixed cost base with little or no financial
benefit in return. In the context of falling advertising revenues, from
£645 million (MAT 7 through Q1 2005) to £598 million 8 (MAT through
Q4 2007), and a tight licence fee settlement for the BBC, the
increased transmission costs are challenging the traditional radio
business models. In addition, for the evolving community radio sector
seeking to establish itself in the analogue world, the cost of digital
broadcasting is likely to be prohibitive for the foreseeable future.
3.3. We believe that the industry cannot indefinitely support the
increased transmission costs of broadcasting on analogue and
multiple digital platforms.
Coverage
3.4. We also believe that the current gaps in coverage and the
robustness of the signal within covered areas are a potential barrier to
some listeners adopting digital radios, particularly portable devices
and in-car. While the current coverage of the national DAB networks
is around 90% of the population we believe that this must increase if
DAB is ever to be seen as a replacement for analogue radio. We also
believe that the industry will need to consider not only how to grow
coverage but also the robustness of the existing signal.
3.5. For the BBC's Nations and Regions services this problem is even
more acute as the BBC's services are carried on local commercial
multiplexes and there is currently little incentive for these multiplex
operators to increase coverage significantly.
European Harmonisation
3.6. There are encouraging signs that other European countries are now
adopting digital radio. However, some are adopting different variants
of the Eureka 147 family, of which DAB is only one. For example, the
7
Moving Annual Total
8
Source: Radio Advertising Bureau
5
DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
French authorities recently decided to license digital radio in DMB-A 9
and in Germany they are currently proposing to re-launch digital radio
on DAB+ 10 or DMB-A.
3.7. Given the demands from global manufacturers to create economies
of scale, any need to build different receivers for individual European
markets would do little to encourage the major manufacturers to
produce new receivers or to plan their product ranges effectively. On
the other hand, a common profile for radio receivers would drive
innovation and help create economies of scale, which could ultimately
bring down the cost of sets.
In Vehicles
3.8. The problems of coverage and lack of European harmonisation are
key reasons why many automotive manufacturers have so far not
chosen to fit digital radios as standard.
3.9. Around 20% 11 of radio listening in the UK happens in cars and
although around 30% 12 of new cars registered in the UK during 2007
were offered with DAB products in their ranges, take-up remains low.
The Society of Motor Manufacturers and Traders (SMMT) estimate the
size of the UK Vehicle Parc (registered vehicles) to be over thirty-four
million cars and commercial vehicles in Great Britain at the end of
2007. Of these vehicles we believe that between 75,000 and 100,000
have taken up DAB radio as an optional extra, with a further 50,000 13
being fitted with aftermarket radios.
4. THE FUTURE LANDSCAPE
4.1. It is the view of this Group that radio must have a digital future, not
least because it represents more choice of channels and additional
functionality for listeners. Radio stuck in an analogue world risks
becoming increasingly irrelevant, particularly to young listeners, as
consumers' expectations for interactivity, quality and choice grow.
4.2. At the same time we recognise that there is not currently an obvious
digital migration path for all radio, because of the amount of spectrum
available and the cost of digital broadcasting. Therefore, we believe
that any agreed solution must first address these barriers, alongside a
longer term plan for a full digital migration.
9
DMB-A is a variant of T-DMB which was developed in Korea primarily for the delivery of digital TV.
10
DAB+ is a variant of DAB which uses a more efficient AAC audio coding.
11
Source: Rajar "DAB the true story' presentation 6 May.
12
Source: the SMMT after a survey of its members.
13
Source: SMMT submission to the DRWG Sub-group 4 these are estimated numbers for a third
party and shown to the SMMT,
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
Technological choices
4.3. Carriage of radio on IP, DTT, satellite and mobile networks offers
listeners alternative ways to receive and interact with their favourite
radio stations. These platforms have an important role to play. In
particular, IP is likely to play a vital role in the future digital radio
landscape, both in its own right and as a complementary technology to
broadcast digital technologies, such as DAB. The two-way
functionality that IP brings can allow exciting features such as
personalisation of the listener's experience and linkage between
traditional radios, your computer, your mobile and other devices. The
industry should embrace the opportunities of a hybrid technological
approach, not least because different technologies suit different
listeners' needs.
4.4. However, whilst delivery of radio on a range of platforms is an
important part of the future market, we believe that DAB, as a
broadcast specific platform, is currently the most practical replacement
for analogue. This is because:
· the UK already has a well-developed DAB market that offers
wider choice;
· it is currently the most appropriate digital means of delivering
portable reception;
· it is free at the point of access; and
· as a radio specific broadcast platform it provides the opportunity
for the industry to determine its own future.
4.5. The DRWG has examined the ongoing development of DAB+ and
other variants of the Eureka 147 family of standards and believes that
in the longer term these variants may help solve some of the problems
of migrating to a totally digital future. However, we believe that, at
least for the foreseeable future, the UK market must adopt DAB as the
main digital radio broadcast platform. The UK DAB market is well
developed and we believe it is not sensible, at this stage, to switch to
technologies which are not compatible with the more than 7 million
DAB sets already sold.
Future Landscape
4.6. We propose that DAB should become the primary platform for all
national, regional and large local services. The opportunity for listeners
to access new content alongside increased functionality and
interactivity, such as Electronic Programme Guides (EPGs), visuals
and text services, can, when taken as a whole, strengthen the
consumer proposition for most listeners.
4.7. In the case of community radio and smaller local services we
recognise that for now analogue still remains the most effective, and
cheapest, way of delivering radio to small geographic areas. For this
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
reason we recommend that until an appropriate migration path to
digital can be achieved for these services, they should be carried on
FM. However, there should be continued work on a plan to assist
smaller commercial and community stations to migrate to digital
without adding significantly to their transmission costs.
4.8. Whilst the intention must be to deliver DAB coverage to as much of
the UK as possible, where it is not economic to roll out DAB then these
listeners should not be disadvantaged by the general migration to
digital. Therefore, it may be necessary for some of the re-structured
FM spectrum to be retained , in those areas where it is not
economically viable to roll-out DAB, to ensure that the BBC can
continue to provide its existing analogue services to all those who
currently get them.
4.9. We believe that this strategic vision must be complemented by a
co-ordinated policy across both the radio industry and manufacturers
to ensure that all future radio receivers are capable of receiving
analogue, DAB and the other variants of the Eureka 147 family.
4.10. Under these proposals all services will be migrated from the MW
platform onto either DAB or FM. Therefore the MW frequencies could
be allocated for other uses.
4.11. We recognise that further consideration will need to be made of the
usage of LW for radio services.
SUMMARY OF INTERIM RECOMMENDATIONS:
· DAB is the most appropriate replacement for analogue radio in the
UK;
· The future radio landscape should at least in the medium term be
a mixed ecology with:
o DAB as the primary platform for national, regional and large
local stations;
o FM capacity for small local and community radio stations;
and
o IP delivery to complement the above and provide
opportunities for greater interactivity.
· Future receivers should be capable of receiving FM, DAB and the
other main variants of the Eureka 147 family.
· A long term plan should be developed to move all services to
digital.
· MW should be re-allocated for other uses, while more work is
needed to consider the future role of LW.
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
5. DIGITAL MIGRATION
5.1. If we are to move to a predominantly digital radio landscape,
listeners must be convinced of its benefits. Broadcasters will have a
very important role in developing and selling the future digital
landscape. One of the main proposals of this Group is that
broadcasters should agree a unified promotional strategy promoting
the benefits of digital radio and helping listeners to make informed
buying decisions.
5.2. Ofcom and Government should make clear statements of their
intention to build a digital radio future. They should state that DAB will
be the primary digital delivery mechanism in the UK, at least for the
next 15 to 20 years; and they should indicate the way in which digital
migration can be achieved.
5.3. This Group does not support the setting of a switchover date for
radio at this time. However, we believe that the Government should
make a clear statement to the industry and consumers of the
circumstances in which migration to the digital landscape set out
above will begin. This statement should include a set of criteria which,
when satisfied, would trigger migration, alongside a migration
timetable for achieving this.
5.4. We believe that the most important of these criteria should be the
extent to which consumers have adopted digital radio, in particular
listening to DAB. The digital migration criteria should include a
determined level of total listening to DAB enabled devices. The Group
intends to do more work in the second half of this year to consider
what the most appropriate level of total listening should be; although
we currently believe that it is likely to be around 50%.
5.5. We believe that in setting the migration criteria the Government
should also consider the existing and planned coverage of digital radio
services; in particular DAB and plans for FM infill. Again, the Group
believes that more work is needed to agree the most appropriate
levels of coverage, but that the over riding principles must be that the
vast majority of consumers are able to migrate. With this in mind we
believe that Government and Ofcom should consider the possibility of
migrating services on a region-by-region basis to allow for spectrum to
be re-organised smoothly.
5.6. We also noted a number of other issues which the Government will
want to consider before any digital migration process can begin. For
example:
· A cost benefit analysis;
· take-up of digital radio technologies in both new and existing
cars;
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
· the affordability, functionality and usability of receivers; and
· the environmental impact of digital migration.
5.7. Progress against the agreed criteria, which the Government should
review regularly, will ultimately determine the timetable for migration.
However, we believe that the Government should set an aspirational
timetable for migration. From our initial discussions we believe that it
should be possible to set realistic criteria to trigger migration, which
meet listeners' needs, which could be achieved between 2012 and
2015 and then digital migration could be completed by 2020 at the
latest. However, whatever the final timetable we believe consumers
should be given at least two years notice before the migration process
begins.
SUMMARY OF INTERIM RECOMMENDATIONS:
· The Government should make a clear statement on the future of
digital radio.
· Government should agree a set of criteria and timetable for the
migration to digital.
· These criteria should include an assessment of:
o the percentage of listening to DAB enabled devices;
o Current and planned coverage of DAB and FM; and
· In considering the case for migration we expect the Government
will also want to consider the take-up of digital radio in cars,
affordability, functionality, and an environmental impact plan.
· The aspiration should be to meet these criteria by between 2012
and 2015 with migration completed by 2020.
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
6. ROUTE MAP AND NEXT STEPS
6.1. As stated in the introduction the purpose of this interim report is to
set out the agreed view of the DRWG and our vision for radio in a
digital future. However, this is an interim report and there are a
number of areas where we believe more work is needed to flesh out
our proposals.
6.2. As we described in sections 3.7 and 3.8, a key barrier to the growth
of digital radio is the lack of European harmonisation of the
technologies being adopted. The DRWG believes that the UK must
work to encourage the production of a harmonised digital radio profile.
This profile should have several layers, with a basic level receiver as a
minimum allowing automatic shifting between analogue and digital
services and be capable of receiving all of the main Eureka 147
variants. We recommend that the industry, manufacturers,
Government and regulators should continue the dialogue which they
have already started with other European states to agree the profile for
a harmonised receiver.
6.3. We intend to continue our work examining the future spectrum
options. The Group will want to consider in detail the current levels of
FM coverage and the scale and cost of delivering comparable levels
for DAB. In addition, we will need to consider the impact of migrating
services off the existing analogue spectrum.
6.4. The DRWG believes that implications of changing the way in which
consumers access radio could lead to confusion and anxiety for
listeners. The radio industry has an important role to play in ensuring
that buying decisions, and the subsequent use of digital radios, are as
simple as possible. We recommend that in the coming months the
industry agree a combined marketing message which promotes both
the benefits of digital radio and greater understanding amongst
listeners.
6.5. Alongside a clear marketing message there must be a range of
compelling content. The Group believes that further consideration
should be made of what mechanisms can encourage greater
investment in new and high quality digital content. One such
mechanism might be to allow greater economies of scale in the
commercial sector by allowing for greater consolidation of ownership
and coverage, particularly of local multiplexes, which in turn may free
up investment for increasing coverage and more digital-only content.
6.6. The Group is aware that the impact of the proposed digital
migration is likely to differ across the Nations. For example, Northern
Ireland currently has no access to the digital-only services carried on
the national commercial multiplex. We believe it is essential that,
where possible, all parts of the UK should benefit from digital
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
migration, therefore we propose to conduct further research and
engage closely with stakeholders in each of the nations to understand
these barriers better.
6.7. Considerable progress has already been made in identifying the
key barriers to the take-up of digital radio by the automotive industry.
The continuing work to agree a multi-standard receiver and increase
coverage will have an important role to play in addressing the
industry's concerns. However, we note the need to agree a detailed
plan to drive the take-up of digital radio in vehicles.
6.8. In the coming months we want to consider the essential elements of
any future energy efficiency plan. In particular, to encourage
manufacturers to look at the existing power performance of analogue
sets as a target for future digital sets and the timetable for delivering
this.
6.9. As stated in paragraph 4.10 we believe that further work will be
needed to consider the future use of LW.
6.10. In addition, the Group will work closely with the various consumer
bodies to consider in more detail the impact of digital migration on
listeners. In particular, how to address the concerns of older or
disabled people and those on low incomes.
6.11. Finally, we intend to consider what mechanisms might be used to
help drive the market in the lead up to digital migration. This will
include whether there is a case for direct interventions such as gifting
or subsidising sets, a help scheme or changes to the existing
regulatory framework.
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DRWG Interim report for the Secretary of State for Culture, Media and Sport, June 2008
Annex A
Membership of the DRWG
The DRWG is chaired by Barry Cox and the following organisations have
been represented:
BBC
RadioCentre
4 Digital Group
DigitalOne
Arqiva
Community Media Association
Society of Motor Manufacturers and Traders
Consumer Expert Group
Intellect
Office of Communications
Department for Culture, Media and Sport
Department for Business, Enterprise and Regulatory Reform
13