'DIGITAL BRITAIN' AND THE RADIO SECTOR

by GRANT GODDARD

www.grantgoddard.co.uk October 2009

The ‘Digital Britain’ report published in June 2009 set out the government’s strategy to ensure that the UK remained competitive in the global digital economy. Its recommendations included a revised plan for the radio broadcasting sector designed to ensure that the UK will be in the vanguard of consumer migration from analogue (AM and FM) to digital platforms. The government adopted a ‘carrot and stick’ approach, on the one hand offering commercial radio some of the regulatory concessions for which it had lobbied but, at the same time, requiring radio owners to make a firm commitment to ensuring that DAB becomes the main terrestrial broadcast platform for the radio medium. The ‘sticks’ that the government insisted must be delivered by the radio sector included:  50% of radio listening via digital platforms by 2013  DAB coverage comparable to existing FM coverage by 2013  Local DAB to reach 90% of the population and all major roads by 2013  Investment in multiplex infrastructure to improve DAB reception  Investment in new, exclusive digital radio content  Retail price of DAB radio receivers to fall below £20 by 2011  DAB radios to be offered in new cars by 2013 In return, Digital Britain offered commercial radio stations these ‘carrots’:  Automatic seven-year renewal of all analogue radio licences  Reductions to the volume of local content required to be broadcast  Opportunities to merge neighbouring local analogue stations  Opportunities to merge neighbouring DAB local multiplexes  Opportunities to transform regional analogue stations into national digital brands There were two flies in the ointment. The first was that the automatic licence extensions offered to all analogue stations would additionally include a new two-year termination clause. If the radio sector as a whole did not achieve the government’s digital radio targets, all commercial station renewals could be revoked with a two-year notice period. Secondly, although the government required significant new investments to be made in digital radio infrastructure (DAB multiplexes) and content (new digital radio stations), it was not contributing public funds to assist. Instead, Digital Britain suggested that the industry fund these initiatives itself through cost savings resulting from the concessions, and from no longer having to meet the expense of broadcasting on both analogue and DAB platforms in future. In the Digital Britain plan, the digital radio criteria would have to be met by the end of 2013, at which point the government would announce a specific date for digital switchover of the radio medium two years hence. This would allow stations to cease simulcasting (on analogue and DAB) by the end of 2015. When Digital Britain was published, the commercial radio industry had two choices. The first would have been to state publicly its rejection of the government’s ‘carrot & stick’ approach as far too restrictive and dangerous to
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its commercial interests. Despite committing no public money to build-out of digital radio infrastructure, the government was threatening to take away licences from the whole sector if it did not meet the prescribed timetable. With the UK commercial radio sector no longer profitable, this was no time to join a poker game where the odds of winning looked minimal, and where the cost of not winning was to lose your licences. The second option was for the commercial radio sector to embrace the government proposals and to work to put them into action. This is the option it chose when it proclaimed that Digital Britain “sets out a clear pathway for our industry’s future” and it committed the industry to implementing the government plan, despite sector revenues having declined 13% year-on-year. Between June 2009 and now, the Digital Britain proposals for the radio sector have provoked much debate but very little action. The ‘carrots’ offered to commercial radio, which would help it reduce its operating costs, cannot be realised until primary legislation is approved by Parliament in the form of the ‘Digital Economy Bill’, due to be included in the Queen’s Speech in midNovember. However, the government faces a General Election in June 2010, making the timescale extremely critical. For the average consumer, unaware of the political poker game being played out over digital radio, it might look as if the development of the DAB platform has stalled. There have been no significant new digital content offerings or digital station marketing campaigns. Now the majority of DAB radio models on sale in the UK also incorporate analogue radio (FM and/or AM), and set manufacturers are increasingly offering radio via the internet. The UK will go ‘digital’ in radio, but whether DAB becomes the primary platform remains uncertain.

[First published in the 'egta Radio Newsletter' #16, 13 November 2009]

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

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