Data provision potential stirs up commercial interest in DAB

Interest in digital radio has been lukewarm due to the cost of the service. But its ability to transmit data is changing that view. By Nick Higham. Nick Higham is BBC Television’s media correspondent.

Don’t hold your breath, but digital radio may actually happen. While much excitement has been generated by the prospect of digital television, digital audio broadcasting – DAB – has been easy to ignore.

There’s a good reason for that. While the extra channel choice made possible by digital compression, not to speak of the potential for delivering vast amounts of data to the home, makes digital TV an interesting commercial proposition, DAB (at least until recently) seemed to involve broadcasters in a lot of additional expenditure, with no immediate prospect of extra revenue.

The BBC has valiantly gone into bat for the new technology, investing several million pounds in a network of transmitters which will bring DAB to some 60 per cent of the population by next March.

But commercial radio stations have been distinctly lukewarm. The national commercial networks have an incentive, because agreeing to take up a guaranteed place on one of the first DAB frequency blocks, or multiplexes (each capable of carrying six or eight stereo services), gets them an automatic eight-year extension to their AM/FM licences. But there is no such carrot to lure the local commercial stations into making the investment.

Now, however, there are signs of progress. At the Radio Festival in Birmingham earlier this month five receiver manufacturers were exhibiting prototype DAB receivers, initially designed for cars (where the high cost of the new technology can be disguised in the overall cost of the vehicle).

The Radio Authority has outlined a timetable for the launch of commercial DAB, which envisages advertising the licence to run the national commercial multiplex in the spring of next year and the licences for local digital multiplexes after that.

And in a discussion paper published last week the Authority suggests there could be one local multiplex in each area except London (where there would be two) plus one giving regional coverage, offering between them some 12 to 16 services (one of which would be the BBC’s local station).

The assumption is that many of these services would be existing local stations, which will need to take a deep breath and find the money to pay for digital transmission now, lest in the long term they find their audiences deserting old-fashioned AM/FM radio for DAB.

But some are likely to be new services. It’s not unreasonable to expect half a dozen or more DAB-only commercial stations, either national or local/regional, in most major conurbations, in addition to the existing ones – plus some extra DAB services from the BBC, like more sports commentaries or headline news.

This extra choice, plus some improvement in sound quality, might just be enough to persuade some listeners it’s worth investing in a DAB receiver, however expensive. But from the broadcaster’s perspective DAB is still profoundly unappealing, with a pay-back time of five years at the earliest.

At least one commercial radio group, GWR, is now grappling with this problem. The company has to embrace DAB if it is to get Classic FM’s lucrative analogue licence extended.

GWR thinks the answer lies in DAB’s capacity for transmitting data as well as conventional audio. The BBC, too, is interested in this – but sees data as simply an add-on to the core radio service, offering listeners text display which tells them what they’re listening to, or Internet-style pages of background information to programmes.

For GWR, however, data transmission on DAB is potentially a business in itself, and a lucrative one at that. A service delivering large quantities of high-value data over the air to PCs might generate 10m a year from 100,000 subscribers paying 10,000 a year each – with the added attraction that to PC users a DAB receiver card costing perhaps 200 is small beer, whereas 200 is a lot to pay for a tranny.

Of course, there are problems. One is that the Government at present has allocated only ten per cent of the capacity on the national commercial DAB multiplex to data – and GWR’s ideas for applications (like transmitting a real-time service of financial market data) would require considerably more than that.

Another problem is that data transmission has become the late Nineties flavour of the decade: everyone’s doing it, or talking about doing it, from digital TV operators to online service suppliers.

DAB has one major disadvantage over online services and some digital TV: it isn’t truly interactive. But it does have the advantage that it employs what is known in the jargon as “push technology” to deliver information to the consumer.

Conventional online data suppliers suffer because their costs rise as the number of customers increases: more line and server capacity is required. Broadcasters, which use push technology to spray information far and wide to thousands, even millions of consumers, don’t have that problem. Their costs remain fixed, no matter how many people are watching or listening.

DAB’s success is still far from guaranteed. But with companies like GWR now grappling seriously with the problem of how to make it pay, it can only be a matter of time before someone finds the key to unlock its potential.

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