Radio industry struggles to find the right wavelength for DAB

The Consumers’ Association magazine Which? has pondered our digital future and concluded that there’s less to it than meets the eye, at least for now.

The magazine’s advice to those thinking of buying a digital TV receiver is: “Don’t rush out and buy the first available set-top boxes – upgrading may be inconvenient and expensive, digital picture quality won’t necessarily be much better and, to start with, the choice of programmes may not contain anything you can’t get elsewhere.”

Add to that the risk of a “box war”, with two different and perhaps incompatible receivers, one for digital satellite and one for digital terrestrial TV, and the reasons Which? advances for proceeding with caution are pretty compelling – even if BDB and BSkyB won’t be too happy.

The uncertainty surrounding digital TV, however, is as nothing to that surrounding digital radio (or digital audio broadcasting – DAB).

The latest evidence for that comes in a report commissioned by the commercial radio companies from the research organisation Nera. It reckons the short-term prospects for DAB do not look good.

For a start, receivers will be expensive – so expensive that the first ones we are likely to see will be in new cars. Even under Nera’s best-case scenario, only about 11 per cent of cars will be fitted with DAB sets by 2007 if they cost between 25 and 50 per cent more than conventional receivers.

Assuming car manufacturers can be persuaded to fit DAB receivers as standard, regardless of cost, Nera estimates that about 35 per cent of all cars will have DAB receivers by 2007 – which implies that only seven per cent of all listening would be digital by then.

If DAB is expensive for car manufacturers and consumers, it’s just as expensive for broadcasters. The cost of transmitting a local DAB service will be 75,000 a year. “As most local services are barely profitable, it is questionable whether they could afford these costs,” Nera says.

The industry as a whole will have to spend 22m on DAB, or 35m if the extra programming costs are taken into account. Commercial radio is currently doing well, but it’s still a small industry, and in that context these are daunting sums.

Nera says it will be important to stimulate rapid growth in DAB receiver sales – but rules out the route which digital TV will take of subsidising the retail cost. Nera’s answer to the problem is a combination of straightforward commercial initiatives and structural changes to the radio industry, and especially to the way it is regulated.

The radio industry, it suggests, could jointly fund development investment with car manufacturers, develop “new and innovative programming” and market DAB’s benefits extensively, especially by cross-promoting it on existing analogue services.

The proposed regulatory changes include making an effort to advertise as many DAB licences as quickly as possible, and raising the number of additional data services a digital multiplex is permitted to carry above the present ten per cent.

It’s all quite sensible of course – and Nera is no doubt right in its prediction that, however unattractive digital radio appears in the short term, in the long term consumers will expect all communications to be digital and radio can’t be left out.

But the future remains uncertain, even among the leading lights in the radio industry itself. That’s clear not just from the Nera report but also from the appearance last week before the Commons Culture Select Committee of the Commercial Radio Companies’ Association.

Tim Schoonmaker, chief executive of EMAP Radio and the CRCA’s chairman, told the committee that different radio companies’ research disagreed about what would drive the uptake of DAB: some suggested it would be better sound quality or interactivity, other new services.

And he candidly admitted that the radio industry was currently “undecided how to play this” when it came to the question of just what new services would be available through DAB.

Quentin Howard, head of GWR’s digital venture, at one moment ventured to suggest that interactivity could be an important feature of DAB, as it will be of digital TV, but a few minutes later suggested that digital audio should benefit from analogue’s great advantage as a medium, namely its portability. Yet interactivity requires a “back channel” – something like a phone line linking the consumer with the broadcaster; portable radios don’t have back channels.

But Howard did suggest one possible way out of the impasse presented by the high cost of DAB receivers – and one which serves as a reminder that digital broadcasting could well be a completely different ball game from analogue.

DAB cards for personal computers, he said, currently cost 300-400, but could be down to as little as 100 before long. That’s a fraction of the cost of a fully-fledged DAB receiver. But if the bulk of DAB listening is through PCs – which are wonderfully interactive but scarcely portable – it does suggest that digital radio may turn into a very different animal to analogue.

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