It’s Radio, Jim, But Not as We Know It
IBOC, DRM, Satellite, Eureka – The Chief Executive of
Digital One Calls for a Combination of Technologies to Satisfy
Market Needs
by Quentin Howard
The author is CEO of Digital One, the national
commercial digital radio multiplex in the United Kingdom.
Who would dare predict the future in print? Nostradamus
for one. And me. I predict that analog FM and AM radio will appear
a pretty thin offering in 10 years’ time when compared to
other media and delivery platforms emerging now and yet to come.
Radio has served us well since 1922. It has survived
the onslaught of talking movies, television, LPs, cassettes, CDs,
MiniDiscs, cable, satellite, DVD and MP3. People like radio, and
listen for more than 20 hours a week. Radio as a device is the
most ubiquitous of consumer products – every household has
around six sets. Eighty million new radios sell each year in the
United States, and a similar number across Europe.
It is a century since Marconi received Morse code
across the Atlantic, and 80 years since public broadcasting began.
Radio is undoubtedly the mass communications medium of
the 20th century – influential, cultural, politically
powerful, entertaining and informative. In fact, radio is so popular
you’d think it would figure centrally in every debate about
media. It doesn’t.
Ignoring radio
In December 1997, the EU Green Paper on Convergence
almost completely ignored radio, concentrating instead on television
and the internet. In the UK, the current White Paper on communications
regulation and media ownership devotes only one percent of its
pages to the subject of radio.
In France last yea, a similar thing happened, and
elsewhere radio is consistently undervalued, both as a medium
in its own right and as a consumer item.
Little wonder, then, that whilst politicians are
busy helping industry to shape the future of television, satellite,
mobile phones and the Internet, radio broadcasters – who
face exactly the same issues in going digital – are left
to struggle alone. The results are unclear business models, slow
uptake and a consequent wavering of commitment.
Dateline spring 1991, the National Association
of Broadcasters convention, Atlanta. Eureka 147 is unveiled to
the world and everyone applauds. NAB President Eddie Fritts declares
that Europe is five years ahead of America and NAB recommends
the United States accepts the Eureka system.
Three months later and NAB rescinds this, claiming
equal transmission areas for all stations on a multiplex would
damage individual marketing abilities. Cynics have a different
interpretation: U.S. broadcasters don’t like the thought
of more radio channels or competition, and U.S. consumer equipment
manufacturers would stand to gain nothing from European-owned
royalties and IP.
Different approaches
Largely as a result of misinformation, the gulf
between the U.S. view of digital radio and the Eureka view has
grown over time.
Europe and the United States take very different
approaches to radio as an industry. Europe is a mix of state-run
public broadcasters and private commercial radio in various degrees
of maturity. Competition is still on the increase and the concept
of more radio channels is seen as an opportunity, not a threat.
Contrast this to the United States, where station
owners rejected Eureka’s opportunity largely to protect the
status quo.
In 1994, the world shared out new spectrum for
terrestrial digital radio, which could mean worldwide conformity
and compatibility. Most countries signed up to this new spectrum,
including all of Europe, Asia and Canada. But U.S. broadcasters
favor re-using existing FM spectrum for a system – unproven
at the time – called IBOC.
Throughout the 1990s, NAB conferences on the respective
merits of digital came close to degenerating into playground name-calling:
"My system’s better than your system." The only
practical outcome of these squabbles was to unnerve Japanese receiver
manufacturers, who prefer a single world market and a common standard.
Consequently, although more than 20 manufacturers
have made and sold digital radios to the Eureka format, the critical
mass necessary for volume manufacturing, which in turn leads to
rapid falls in silicon cost, has not yet happened.
Fast-forward to the year 2000: Eureka 147 DAB is
rolled out in over 30 countries with more than 400 digital radio
services on-air and 300 million people within range of multiplex
transmission. Of those countries committed to a digital radio
system, only the USA and Japan have not adopted Eureka.
After eight years searching for a viable US alternative,
the main contenders developing IBOC – USA Digital Radio and
Lucent Digital Radio – merge their efforts to form iBiquity
Digital, a company owned by broadcasters as a vehicle to exploit
the IBOC technology IP.
IBOC’s marginal benefits
There is no doubt that IBOC has clear advantages
for a U.S. broadcaster who, by adding a digital exciter to an
existing FM transmitter, can simulcast a digital version of his
service. Providing the interference caused to and by other FM
services works out, IBOC is likely to prove the cheapest way to
go digital.
Where the argument gets muddied is in the assumption
that what works in the United States will work everywhere else.
FM frequencies and transmitter powers are planned to very different
criteria on either side of the Atlantic and this, amongst other
things, may prevent IBOC getting a look in.
People are amazed that whilst a New York City FM
station may boast 50,000 or 100,000 watts, the equivalent FM in
London is limited to 4,000 watts. And whereas the USA has 9,000
FM transmitters, across Europe, more densely packed and smaller
geographically, there are 23,000 FM transmitters.
IBOC as currently engineered would probably make
the existing European FM spectrum plan unworkable.
Whilst Eureka has been building its networks and,
as some would have it, waiting for manufacturers to honor their
supply promises, and whilst the United States is still waiting
for IBOC to happen Big Time, new rival digital radio platforms,
which may yet prove how fragile the radio ecosystem really is,
have already arrived.
Perhaps IBOC and Eureka 147 should take stock for
a moment and realise that they both have more in common than either
would like to admit.
For a start, both need to persuade manufacturers
to invest significantly in research and development, and to manufacture
new radio receivers.
To achieve mass market penetration there is only
one issue: the retail price of a digital radio. Consumers have
a perception that radio is already almost a zero cost addition,
or that a stand-alone radio is low-ticket, sub $50 item. So why
would anyone purchase an expensive digital radio?
The IBOC content proposition means digital radio
offers exactly the same as analog and the only marketable difference
is the quality upgrade of AM stations, plus data. It is doubtful
that consumers will value this at more than a few dollars, insufficient
to meet the delta cost of adding IBOC technology to any audio
device.
The challenge for the United States is to make
IBOC radios for essentially the same price as existing FM/AM devices.
The role of DRM
This same challenge faces Digital Radio Mondiale
too, the digital shortwave and AM replacement system.
Whilst DRM’s audio quality doesn’t bear
too close scrutiny, and finding simulcast spectrum for a dual-mode
AM transition strategy will be a task in itself, there is possibly
a role for DRM in long-distance and domestic rural broadcasting,
provided the receiver cost is not prohibitive. But DRM is unlikely
to be successful as the sole digital replacement technology.
Unlike IBOC and DRM, which essentially offer listeners
"the same only different," the Eureka proposition offers
perhaps twice as many radio channels as current analog availability,
plus multimedia data applications and flexible digital audio quality.
This is ultimately more compelling and therefore may be able to
command a premium on the final consumer price, but still there
is a big gap between current DAB component costs and the relatively
small retail premium attainable.
The subsidy debate
With both IBOC and Eureka, the question of subsidy
of receivers to kick-start the market arises.
Any broadcaster contemplating subsidy, other than
for a marketing stunt, would be mad. Subsidy is like a drug –
once started, it’s hard to come off, and it serves little
purpose other than to allow the retailer/manufacturer to maintain
margins which the broadcaster pays for through the nose.
The plain fact is that subsidy is only applicable
where there is a subscription income stream from the end user
to pay for it. One of radio’s great virtues is that it is,
for the main part, free to air.
Yet without intervention, the receiver market will
be very slow for both Eureka and IBOC. Meanwhile, alternative
platforms are emerging, some overhyped and ultimately inconsequential,
others which should be taken more seriously.
For $10 a month, U.S. consumers can subscribe to
either XM Satellite Radio or Sirius Satellite Radio, which promise
to deliver 100 channels apiece. The subscription income immediately
allows in-car receivers to be subsidized and, with additional
substantial investment from car manufacturers, it is likely that
satellite radio receivers will emerge more quickly than other
digital radio devices in the United States.
Whether people will quickly get bored with DJ-free
music services is debatable, and my money is on a gradual return
to real radio with announcers and DJs doing what’s been working
well since the 1920s.
Limited capacity
WorldSpace receivers are appearing in discount
electronic retailers in London and in abundance in duty free shops.
Simultaneously, we wonder if the WorldSpace satellite is having
trouble with its on-board guidance controls? Suddenly it appears
that its beams are receivable in Europe – not bad for a service
aimed at continental Africa!
Proponents of satellite radio in Europe seem to
have glossed over the obvious shortcoming that whatever capacity
exists has to be shared between 20 nations, each with its own
language and culture. Unlike U.S. satellite radio, the offering
relevant to one country will be severely limited.
Critics of satellite radio point to the need for
terrestrial repeaters to provide adequate city coverage and any
hope of in-building penetration, and this requires yet more spectrum.
Some would go as far as to label it a back door means of achieving
conventional terrestrial radio with the bonus of a satellite repeater.
Internet or UMTS?
The Internet is losing its gloss all round, including
as a viable alternative means of delivering radio. Broadcasters
who rushed to set up audio streams and stake a claim to cyberspace
now realize that it is limited and expensive.
Broadband connection is essential, and even then
the share of radio listening by Internet is minimal compared to
traditional radio reception. The commercial value of a Los Angeles
listener to a radio station in Paris, France, is nil. I.T. managers
hate it when corporate networks clog up with multiple radio feeds,
and ADSL backbones congest when too many users access high bandwidth
content.
One of the world’s largest broadcasters reckons
its maximum capacity of 30,000 simultaneous Internet streams costs
up to $30,000 per hour (including server, throughput and licensing).
Compare that to the $100 per hour of a national digital transmitter
network reaching unlimited millions, and it isn’t hard to
see that the efficiency of the broadcast model is way ahead of
Internet streaming.
The same limitations apply to mobile phones which,
for all the promise and hype of UMTS, cannot provide even a fraction
of a percent of the capacity terrestrial radio broadcasters need.
Moreover, listening to radio on a mobile phone connection is never
going to be free to air.
In any analysis, terrestrial radio remains the
most powerful and compelling consumer proposition. Digital radio
adds considerable value to the proposition, yet keeps all the
attributes of existing radio.
IBOC will be made to work and may be successful
if the consumer appreciates the marginal benefits. Satellite is
dependent on geography and subscription. DRM may find favor in
limited markets, starting perhaps with international broadcasters.
The internet and mobile phones are extension platforms, not replacements.
Meanwhile, Eureka has already gained considerable
momentum and commitment which will ensure its continuance.
Combine technologies
So is there a clear way forward without confusion?
One realistic option is to encourage a combination of technologies
to satisfy market needs.
In countries like Australia, DRM would be ideal
for the outback and Eureka for its metropolitan cities. Such a
strategy could work with other system hybrids too, and with a
big change in attitudes to system rivalry, a successful roadmap
can be built which sees receiver manufacturers making worldwide
devices with standardized optional modules inside for IBOC, Eureka,
DRM.
This could ensure the success of all the digital
radio systems rather than the damaging and expensive likelihood
of market failure for one or more of them. Ultimately the consumer
isn’t driven by the best technology, he just wants a radio
that works and we should be capable of delivering that to him.
RW welcomes other points of view.
