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NEWS: SPECTRUM FOR DABDIGITAL RADIO STATIONS

REDUCED TO MAKE WAY FORMORE LUCRATIVE MOBILE

SERVICES

by

GRANT GODDARD

www.grantgoddard.co.uk 

July 2006

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 A reduction of DAB digital radio radio services on local multiplexes could takeplace in order to free up spectrum for mobile services that would prove morelucrative for DAB multiplex owners.

 Announcing the launch of his company’s digital music retail service for mobile

phone users, UBC Media plc chief executive Simon Cole said: “Theimplementation of our downloading service on those [other] multiplexes wouldinvolve the reduction of audio services on those multiplexes. That is obviouslysomething that needs to go through Ofcom and needs careful considerationbefore we announce it, but those discussions are at a detailed stage.”

 A proposal to amend media legislation to permit an increase in the amount of non-radio use of spectrum on DAB multiplexes from the current 20% to 30% isalready the subject of a consultation exercise by the Department for CultureMedia & Sport [DCMS] and is supported by Ofcom. The consultation documentexplains that the current 20% limit had been legislated “to prevent digital radio

services from being crowded out by potentially more lucrative televisionservices”, but it argues that an increase now to 30% would “allow thedevelopment of new mobile TV services which will increase consumer choice.”

DCMS promises that “there will be no reduction in the number, but somereduction in the sound quality, of the [radio] services on the national digitalmultiplex” with two stereo services having to be reduced to mono. No mentionis made in the consultation that two of the stations originally licensed for thenational multiplex, 'ITN News' and 'Bloomberg News', have already closed andnot been replaced while, since the consultation’s publication in April, a thirdstation ['Primetime' – see issue #741] has also closed and not been replaced.Now only four national digital-only stations remain, three of which belong to themultiplex owner GCap Media plc.

The DCMS consultation only refers explicitly to the impact of the proposedpercentage increase on the national commercial DAB multiplex, for which itstates that “Ofcom will not agree to any reduction in the number of servicesbroadcast on the multiplex.” No mention is made of the impact the changewould have on local DAB multiplexes, and DCMS makes no promise that thenumber of services they carry will not have to be reduced. These multiplexesare owned predominantly by the UK‘s largest radio groups, who have raised

no objections to the change because they are likely to increase their revenuesas a result. DCMS argues that, if the government does not increase thepercentage, “a number of innovative services may not be brought to market,and DAB itself may suffer by virtue of not being part of a more compellingmedia package.”

 At the heart of the issue lies the question of exactly how 'compelling' thecommercial radio industry’s digital-only stations are to consumers. 'MediaWeek' commented: “Many of the [commercial] stations on DAB are merelyunmanned radio jukeboxes, with computer-generated playlists of music andnews bulletins.”

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Nathalie Schwarz, director of radio at Channel Four Television, said: “Thereneeds to be some people willing to invest in quality content, greatprogramming and strong marketing. That’s how Sky built its platform, howFreeview got off the ground, and DAB needs that impetus and energy.”

'Music Week' commented: “The challenge now [is] for the commercial sector toexploit the potential of digital technology so that it eats into BBC share [of listening], without simply engaging in an internecine squabble for ever smaller slices of the pie.”

Richard Eyre, former Capital Radio chief executive, said that the commercialradio industry’s continuing “defensive and familiar” criticisms of 'Radio Two' are“not much more than an admission that BBC Radio has its act together.”

Paradoxically, radio groups are recognising that it is less risky and moreprofitable to lease spectrum on their DAB multiplexes for mobile phone

applications than to try and compete against the BBC with new digital radioservices. Explaining the rationale of radio companies such as Chrysalis plc thathas already signed up for his music download service, UBC’ s Cole said: “If you’re a radio group, why would you not want to be involved in a businesswhere you don’t actually have to spend any money, and £13m might drop tothe bottom line as a result of [music download] purchases from your radiostation? It’s a classic no-brainer for a radio group.”

The DCMS consultation noted without comment: “Chrysalis reported that itwould carry losses on [DAB] digital stations in the order of £3m.”

[First published in 'The Radio Magazine' as 'DAB Radio Is To Be Sacrificed For Mobile Bandwidth', #743, 5 July 2006]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancyroles within the commercial media sector in the United Kingdom, Europe and Asia. Details athttp://www.grantgoddard.co.uk