Wednesday, 12 March 2014

Who else is fed up talking about digital switch-over?

Phil Riley
CEO Orion Media
Speech to the Westminster Media Forum Seminar
UK Radio – innovation, competition and switchover

I think we need to reappraise our policy on the UKs digital radio future, and I’d like to propose a new approach:
It seems to me two irreconcilable facts mean our current policy is flawed.
Those facts are;
1 – DAB is here to stay. With a 23% share of all radio consumption it’s inconceivable that we won’t be using DAB as a significant platform for listening for the foreseeable future, and any major radio station that can access DAB (either locally or nationally) will suffer significant economic damage if it fails to make use of the platform.
2- Many listeners still love FM, and it isn’t going away anytime soon. 90% of the UK population listen to the radio each week. Of those weekly listeners, 85% do so on AM/FM for at least half of their total listening – mainly FM. Let me repeat that number – 5 out of 6 regular radio listeners still use analogue platforms for the majority of their listening.
Given those two facts, along with the now accepted view that the FM spectrum is of no use handed back to the government, and that we will always need a broadcast backbone, shouldn’t we just accept that we live in a multi-platform world, urge the Government to stop planning for switchover for the foreseeable future, and just get on with running the industry as it is.
TV stations, mobile networks, apps developers all now have to live in, and cope with, a multi-platform world, and when consumers simply expect content to be delivered whenever, wherever, in the most convenient manner possible, why have we in radio come to the conclusion that we can simply impose a diminution of platform availability on people, simply because it’s currently costing us more money. I’m not sure it’s a defendable position.
Clearly nothing lasts forever, but I would propose for now that we simply place a moratorium on even discussing formally the closedown of FM for, say a decade. And if we did this, I think there are three major policy implications:
1 - We should pause and re-evaluate the local layer density improvement work. Plans as they currently stand are likely to see DAB TX costs rise significantly over the next couple of years for local service providers, in part because of the now delayed requirements for FM switch-off.
I’m not saying we should stop the rollout of the local layer to significant white space. Of course we should. Gem, our regional East Midlands service, is on DAB in Nottinghamshire and Leicestershire – but not Derbyshire. That makes it difficult for us to promote on FM the fact we are also available on DAB – which some listeners prefer. So let’s get Derby on – cost effectively – as quickly as possible. But I’m not sure all the new transmitters planned are needed right now, in a multiplatform future, and certainly some of them might be harder to commercially justify, especially on muxes where only one or two local service providers are effectively carrying all of the costs. I’m just saying let’s pause, check and perhaps not be quite so ambitious in the short term if we have a bit more time.
2 – If we placed a moratorium on switchover, we should deal with the aggravation currently being caused by shortened FM Licensing renewal. It seems to me to be almost perverse to be issuing 7 year FM licences if we are unsure about stopping future FM availability, and in an era when radio choice is deeper, richer and more easily accessible than ever. Let’s give every FM licencee, local and national, the same proposal that has been made for all Muxco holders, a new 15 year term from now to 2030, and be done with it. We can review everything in 2024/25 – 10 years or so from now - if needs be. DAB as a platform is essentially built and established now. New entrants will be able to join D2 for example, secure in the knowledge that good, inventive, programming can find a profitable audience. Given that, those of us who have toiled in the industry for the past 15 years and have paid for that platform development out of our FM revenues, when it was utterly uneconomic to do so ought to be given some support here – so let’s agree a 12-15 year extension/rollover and review everything in 10 years time.
3 – Finally, we should finally bite the bullet and abandon most content/format regulation. With National DAB 2 on the horizon, smartphone proliferation and wifi/4G penetration booming, we simply don’t need the gatekeeper approach that OFCOM have supplied for so long. The market is now big enough to supply the rich, varied content OFCOM require, without formal intervention.
There is one exception. I think we ought to retain, for every town/city, at least one FM licence with a requirement to be local, via news, information, general content etc. Everyone else should be able to do what they want – if they do it badly the market will take care of it by having them bought out and the programming replaced. Perhaps there should be a population based fee for format/localness freedom – a few pence per potential listener perhaps - with those carrying localness requirements exempt from the charge?

So – let’s end the uncertainty of switchover by scrapping it for now. Relieve existing local layer DAB service providers of the threat of increased costs right now, and free the industry from the stranglehold of licensing/formats in this new world of plenty. Radio is in great shape right now – let’s keep it that way.