Risks of a government enforced digital radio switchover for UK listeners November 2013

Transcription

1 Risks of a government enforced digital radio switchover for UK listeners November 2013 Background In December 2013, the Minister for Culture, Communications and Creative Industries, Ed Vaizey is expected to announce Government s plans and timetable for a switchover from FM and AM to DAB digital radio. Unlike TV switchover, radio switchover does not form part of an internationally coordinated programme and will not unlock a taxpayer dividend from the sale of analogue spectrum. Anglian Radio, Celador Entertainment, CN Radio, Media Sound Holdings, Q Radio Network, Quidem, UKRD and UTV Media together with independent stations Brighton s Juice 107.2, Radio Jackie, Radio Plymouth and SIBC believe that the policy has the potential for disaster: Evidence shows that listeners are well-served by existing platform choices whilst local commercial radio stations are severely disadvantaged by the switchover plans. Switchover poses a serious risk of listeners losing access to radio unless they spend several hundred pounds per household on new digital receivers. The cost of access to the digital radio platform is prohibitive for many smaller stations, and switchover may not be appropriate or even feasible for many broadcasters. Significant new public funding will be required to expand local DAB coverage and even then as many as 100 important local commercial radio stations will be left stranded on FM or forced onto a digital platform which is unaffordable or unsuitable for them. Together we represent 80 commercial radio stations in the UK, ranging from Shetland to Cornwall and from Brighton to Belfast and reaching a combined weekly audience of over 6 million listeners. Each of our groups is committed to technological progress for radio in the UK with increased quality, coverage and choice, as this can only benefit listeners and the radio industry. However we believe that consumers should determine whether and when there is a future switchover, and that policies should be devised to protect valued local commercial radio stations. The risks of government enforced switchover There is compelling evidence that enforced switchover will cause extensive damage to overall radio listening and accessibility to services. We set out just a fraction of the evidence below. 1. Significant affordability and access issues for consumers: Consumer data reveals significant loyalty to AM and FM, raising the prospect that an enforced switchover would reduce listeners access to and affection for the UK s oldest broadcast medium: There are 101m 117m radio sets in the UK market, of which 83% are used at least weekly but just 15-19% are digital 1. Only 46% of radio listeners with radios have at least one DAB set and consumer interest in buying DAB has plateaued since the technology was launched 14 years ago 2. Currently only 23% of radio listening is to DAB and all forms of digital listening including DAB actually fell in the latest listening figures 3. 1 Ofcom, Digital Radio Progress Report, September Ofcom, Digital Radio Progress Report, September RAJAR Q3 2013

2 Listeners express strong satisfaction with their choice of radio services via various platforms, with overall weekly reach for radio standing at a robust 90% of the population 4. Issues with in-car uptake of DAB radios effectively guarantees that switchover would reduce motorists access to UK radio services. Only 3 to 5% of vehicles on UK roads have DAB installed, and yet 21% of all radio listening is in cars. The cost of installing DAB in cars is significant even the most optimistic forecasts suggest that there would still be a substantial number of analogue receivers in vehicles at switchover. Adding to concerns about public access to DAB, the price of DAB radio sets has not decreased in the last five years and a digital portable set is three times more expensive than the average price of a portable analogue radio ( 17 in ). As a result the average household cost of converting all sets include in-car to DAB could be in the region of per household 6. The above facts not only present problems for the radio industry but raise serious questions of consumer affordability and reduced access to radio services. Consumer groups such as Which?, the Voice of the Listener and Viewer and Consumer Focus, are already expressing concerns and reservations over a switchover Threat to the provision of local radio the voice of the local community from the move to DAB The local DAB transmission network is currently configured to favour national and large regional radio rather than locally orientated commercial radio stations, each of which provides a voice and platform for local communities across the UK. Currently just 14% of listening to local radio is via DAB. As a result, switchover to DAB digital radio could place up to 100 local radio stations at risk of closure, resulting in significant local job losses. There has been cross party parliamentary concern at the absence of digital migration pathways for in excess of 100 local radio stations 8. This is due to absence of transmission capacity, or unaffordable cost. Under current plans, these stations would be confined to FM whilst Government promotes DAB as the UK s primary radio broadcast platform. In 2010, the previous government pledged the introduction of a combined FM/digital station list on receivers making all stations equally prominent regardless of platform. We understand that it is seen as the responsibility of manufacturers to introduce this feature and it is not available on any of the 18million DAB sets sold to date. An alternative solution may be licensing low-cost localised DAB transmissions for these stations; an idea which was the subject of a recent Ofcom study. DCMS is yet to commission a proper feasibility study of this method, which is unlikely to be appropriate for all due to issues of cost, coverage and frequency availability. Furthermore, under current proposals, many local commercial stations earmarked for switchover would have to abandon their current localised programming and news and merge their output with neighbouring stations to form larger regionalised services. 4 RAJAR Q DCMS, Cost-Benefit Analysis Of Radio Switchover: Methodology Report, July 2012, p.15 6 Ofcom, Digital Radio Progress Report, October House of Lords, Select Committee On Communications, Digital Switchover Of Television And Radio, March See e.g. Early Day Motion 436, Future of Local Radio, 10 December 2009 which drew 84 signatures and warned of a twotier radio industry in which over 100 local stations, that do not have a clear digital migration path, are consigned to an uncertain future on the analogue spectrum once digital switchover has occurred.

3 Unlike many local FM networks, the DAB platform lacks the ability for many local stations to provide localised programming and advertising for different parts of their coverage area. This could result in the loss of many crucial platforms for local communities, as well as valued marketing platforms for local businesses. Even for those stations for which digital radio is technically feasible, it may be financially impractical. For smaller local stations in particular, the costs of digital broadcasting are substantially greater than for FM transmission but switchover would bring no benefits in terms of additional revenue. 3. No taxpayer dividend from vacated AM and FM spectrum so no policy rationale for intervention FM and AM are ideally suited to radio broadcasting, and perhaps surprisingly there are currently no coherent plans on what will fill AM and FM bandwidths if a switchover goes ahead. Without an alternative use, the likelihood is that illegal pirate services will occupy the vacated frequencies. Current ideas for the vacated spectrum including licensing new community radio stations or increasing their coverage areas. We believe that this risks diluting community services tightly focused social objectives whilst directly contradicting government efforts to move local commercial radio stations off the FM and AM bands and onto digital. Unlike the digital TV switchover for radio there will be no taxpayer dividend from the sale of analogue spectrum. The technical characteristics of both AM and FM frequencies make them ideally suited for radio broadcasting, but ill-suited for other technologies. Without any great demand for this spectrum, there is no prospect of revenue for the Treasury from its sale to offset the additional costs. In the absence of any taxpayer dividend, it is hard to see what public interest is served by a government-mandated switchover. The consumer benefits of DAB can be realised without switchover - indeed, many radio listeners already enjoy them. The task of persuading more consumers to adopt digital radio would seem to be properly undertaken by market participants - i.e. broadcasters and the consumer electronics industry - rather than through government intervention. 4. Increased licence fee costs as a result of public subsidies for local DAB coverage DAB currently has significant coverage problems. Whilst the national BBC networks benefit from reasonable digital coverage, it is much cheaper to provide coverage for local stations via FM and AM than via DAB. Currently, Ofcom states that: Local radio achieves 98% coverage of homes on FM, whilst DAB achieves only 72% Local radio achieves 96% coverage of roads on FM, whilst DAB achieves only 56% National commercial radio achieves 90% coverage of roads on FM, whilst DAB achieves only 76%. 9 To address this, the government is proposing to use licence fee funds to boost local DAB coverage, increasing costs for licence fee payers. Ofcom has previously said that the number of local DAB transmitters will need to be tripled to improve coverage of households to 94% overall Ofcom, The Communications Market: Digital Radio Report, September Ofcom, An Approach To DAB Coverage Planning, June 2011, Annex B

4 There has been no public of Parliamentary scrutiny of this new call on the BBC licence fee and moreover the local DAB coverage enhancements planned would do nothing to boost access to the DAB platform for smaller local commercial stations, with the public funding targeted instead at boosting coverage for larger commercial and BBC stations. 5. A scheme with no independent cost benefit analysis or impact assessment There is no doubt that a full DAB switchover will be expensive, with significant costs to consumers, broadcasters and licence fee payers. A cost benefit analysis and impact assessment was commissioned by the previous government and when eventually published it revealed a significant risk that the benefits of switchover would be outweighed by the perceived costs. The failure to initially publish this finding was criticised by the House of Lords Communications Committee in A more comprehensive government follow-up study has been promised since then 12 but we understand that there are no plans to publish this prior to a switchover announcement and that the government s workings will not be subject to any independent scrutiny. The solution: a focus on the interests of listeners and local commercial radio stations Many of our groups have significant digital radio investments; and we wish to see technological progress for radio listeners in the UK with increased quality, coverage and choice. We support the ability for broadcasters to develop their digital radio offerings. However, decisions about technology and platforms are business choices and, in the absence of any over-riding public interest objective, should be made by business operators, not mandated by government. Creating an environment in which broadcasters are enabled to decide for themselves whether and when to switch off their analogue transmissions, based on their knowledge of their own markets, would seem to be a sensible and logical policy approach. Our preference is for government to choose not to proceed with an enforced switchover to DAB but instead to adopt a platform-neutral, market-led philosophy: 1. Any transition to DAB should take place carefully, gradually and be consumer led. o Previous successful switches - such as to FM - were gradual and took place over a far longer timescale than is likely to be proposed now. o The UK is the only EU country considering a DAB switchover and there are also no similar plans in other major radio markets with digital broadcast networks such as the USA and Australia. o An overly hasty, one-size-fits-all approach, enforced by government on the whole industry, risks leaving many consumers behind, and jeopardising the future of many smaller local radio stations. A more considered progression will allow the broadcasting market and consumers to dictate where the next commercial and government investment should be. 2. Broadcasters should be enabled to decide for themselves whether, and when, they wish to switch over their stations entirely to digital. o Ofcom should be asked to create a regulatory environment in which broadcasters face no impediment to ceasing analogue transmission if they choose. Broadcasters should 11 House of Lords Select Committee on Communications, Digital switchover of television and radio, March DCMS, Digital Radio Action Plan Version 1, July 2010

5 o o be able to decide on a market-by-market or station-by-station basis whether and how to make the transition to digital. In all other respects, Ofcom should be asked to adopt a platform-neutral position, recognising that digital switchover may not be appropriate or feasible for all stations. Broadcasters wishing to withdraw a station from DAB should be able to do so without the threat that the associated local analogue frequency will be withdrawn by Ofcom and not readvertised. To protect stations remaining on FM, we advocate a combined station list as mandatory on all sets: complementary programme listings for FM and DAB so that all local and national stations have equal prominence to listeners. 3. If the government were minded to proceed with a mandated switchover plan, it should provide a clear policy rationale, and set out pre-conditions for switchover that protect listeners: o Without a taxpayer dividend from the sale of analogue spectrum, it is unclear what policy objectives are served by a government-mandated switchover. Any switchover proposal should clearly and rationally express what these objectives are. o Strict criteria for switchover should be set out to ensure as few listeners as possible are disenfranchised by any switchover plan. For example, AM / FM listening, both in general and in-car, should have reduced to 10% of total radio listening; DAB coverage should be equivalent to analogue coverage for all BBC and commercial stations. o Any switchover plan should clarify what will happen to those stations, BBC and commercial, for which migration to digital is either technically or financially unfeasible. It should be made clear how the interests of listeners in those localities are being protected. 4. For a considered and independent Cost Benefit Analysis (CBA) of switchover viability and publication of the government s previous assessments o Given the significant consumer, licence fee and industry costs associated with switchover, publication of an objective and comprehensive CBA for external scrutiny is an essential prerequisite for any switchover decision.