| Can HD radio
hack it in the US?
Following up on our March comment and in view of some of the activities
at NAB 2005 this month - see our report on US National Public Radio's
planned launch of new multicasting services - we look this month
at the technology that is being pushed in the US as the answer to
competition from satellite and to a certain extent that from other
media - digital radio.
Last month we concerned ourselves mainly with the general problems
radio faces as other technologies compete for time: this month our
emphasis is on what HD - the iBiquity in-band-on channel system
adopted in the US - can or will do for terrestrial radio there.
Before considering where the US is and how
it should proceed in introducing HD, we felt it would be instructive
to look at the UK's experience.
Here digital radio is generally considered a success story
in the making, although so far it has been produced costs
rather than profit for commercial radio companies.
The first question therefore is to ask why the commercial
radio companies have put in the resources they have in the
The answer is a combination of carrot and hoped-for-carrot:
In the UK, whether by well-thought out design or fortunate
congruence of factors, the regulatory regime was in a position
to offer a carrot, because it could also wield a stick, and
The stick was there because commercial licences were not automatically
renewed at the end of a licence period but were re-advertised:
True the incumbent usually had an advantage and sometimes
there were no competing applications, but there was the risk
that a station could be out of business even though the system
was one of a "beauty contest" that decided on the
basis of the plans put forward rather than by competitive
That being so, the decision to grant automatic renewal of
an analogue licence when the station involved was providing
a service on the local commercial multiplex was a real incentive
to provide such a service.
In addition - even though the BBC was allowed frequencies
to broadcast its existing networks plus extra channels - and
had a channel for its local station allocated on local commercial
multiplexes - the digital channels evened out the playing
field for commercial radio which was short on frequencies
compared to the BBC.
It would therefore have the opportunity to try and increase
its share of the audience and also through a national digital
multiplex compete more evenly with BBC networks and through
local multiplexes offer significantly more choice as well
as also having significantly more outlets to sell advertising,
which was limited in the UK by the regulator rather than by
what the listeners might have to stand for.
The effect of the above was to ensure that long before listeners
had bought any significant numbers of receivers, there were
new services available for those who did then buy them.
Despite this combination of technical quality advantages and
extra services, initial take-up was still very slow whilst
receiver prices remained high - people were understandably
reluctant to pay ten or more times the price for a digital
receiver than for an analogue one.
The crucial psychological change in our view that broke the
logjam was to promote sets in late 2003 below the GBP 100
barrier - they sold out despite the fact that reasonable quality
portable receivers were available for a fifth of this.
Once this had been done, more manufacturers began to enter
the digital receiver marketplace, prices went down more, those
- and to the surprise of most people more sets were bought
by older listeners than by the young, usually seen as early
adopters of new technology - who bought receivers reacted
positively to the service, and a self-sustaining circle began
that boosted sales of digital receivers even more dramatically
at Christmas time last year.
In addition to all the above, UK digital also had the advantage
of gaining slots on satellite TV channels and on the TV terrestrial
digital platform Freeview for which no subscription was required,
expanding the audience through those who listened through
their TV sets.
So in the light of the above, how does
US the situation for US commercial terrestrial radio compare
with that in the UK?
Firstly it does not have the same incentives to push digital
in terms of licence renewal - an automatic process.
Secondly it is not in the same position in terms of frequency
scarcity in competing with a public broadcaster that applies
in the UK.
Thirdly, although more stations are belatedly going for digital
transmissions, the system is different in that there is no
extra frequency as has been allocated for the UK DAB system
but rather, valuable though it may be, just the opportunity
to squeeze more out of existing frequencies.
Fourthly so far there is not a great body of new choices available
on digital only, just simulcasts of existing analogue station
Fifthly receiver prices, even though they have fallen, are
still much higher than those of analogue receivers.
Sixthly in the US there is already a digital audio competitor
in satellite radio, which offers considerable extra choice
and has already gone much further along the road of mass-producing
receivers with consequent lower prices.
So what are the pros? What will a would-be listener get from
purchasing a digital receiver? They include:
Better technical quality.
Extra text information that can be sent via the digital signal.
More commercial channels that will almost certainly be of
the same nature as those that already exist but probably narrower
to attract even more closely defined demographics that advertisers
want to attract.
Possibly fewer adverts per hour on those channels than on
More channels allowing additional services from both commercial
and public radio.
Is it worth buying
a digital receiver?
The response to the above has to be a highly
sceptical one for the moment since receiver prices are almost
certain to fall and as yet only a comparatively small number
of stations are broadcasting HD. But there are hopeful signs.
The benefit from a better technical quality depends very much
on the technical level of the existing analogue signal - in
much of the UK a good quality receiver produces excellent
quality stereo even for programming with a very large dynamic
range thus meaning that for home use the benefit is not that
great whereas in an automobile road noise overwhelms any quality
Yes we do appreciate the extra quality from our digital receiver
but only when listening in a quiet room: Background noise
from other equipment such as in a kitchen or where there is
a computer fan in the background certainly affects the quality
of listening more. This argument, therefore, only applies
in areas where terrain makes reception difficult or where
a station doesn't keep its output up to scratch.
Extra text information? Not enough to justify spending a lot
more on a new receiver.
More channels, commercial or public? Fewer adverts per hour?
Certainly a strong pro in any area where these are being delivered
and they are providing programming you want. Maybe not enough,
however, if you have already spent on getting satellite and
thus are already paying for digital and a wider choice of
From the above, we conclude that for a period the US could well
need to clear a logjam that is even worse than existed in the
UK a couple of years ago. It was cleared in the UK through the
combination of extra channels of programming, better quality,
and fairly reasonably priced receivers.
We think that the US therefore needs to do a lot more to produce
the programming and reduce receiver prices if people are to be
persuaded to go digital. We also think radio is on a long-term
loser unless it bites the bullet on this. In this regard public
radio is certainly taking some welcome initiative.
We can certainly see prices coming down - and a big station owner
could do a lot more, even if it is by offering branded receivers
at a lower price, a move some UK radio companies have adopted,
to drive this process. They usually have the sponsor's station
at the top of preset programmes and branding on the receiver itself
but they work.
On programming however, we retain our doubts since producing a
quality product will cost money and we wonder how far there will
be extra returns to pay for it.
If the programming isn't both additional in content and of high
quality then we'd probably decide to divert the money to satellite
subscription or other audio sources.
The decision, therefore, depends very much on the HD services
available in a particular area but one of the things that we could
see HD in combination with multicasting do is to provide for the
US the equivalent of the national network services that are available
in the UK.
US commercial radio could thus potentially make a similar move
to that being developed by NPR and provide a number of services
especially intended for national multicasting; thus if it's prepared
to put HD into almost every station it can undercut satellite
radio's current exclusive ability to provide the same service
for someone on the move across the US.
The problem with this is where it leaves the "localism"
on which US radio built: Elsewhere licence conditions mean that
if local services were gutted to pay for such extra services,
station might well lose their licences but in the US the growth
of voice-tracking as technology made it possible and cheaper than
keeping on local staff has already shown that no such penalty
is even on the horizon.
Extra national services plus existing local services would be
positive for the US but in the place of them we would see national
services as a negative but the main counterbalance to a tendency
to drop localism seems to be local advertising and that has been
a weak one so far.
In the end HD radio will come to the US and it can produce benefits
but when it comes to spending cash to buy receivers, the balance
still seems currently in favour of sticking to cheaper analogue
receivers and spending on satellite.
As HD services become available in a locality and receiver prices
drop this balance moves towards HD: Whether or not it ever comes
down firmly for HD will be a matter of personal programming preferences
and how much an individual travels out of a home area but once
you can get a reasonable HD receiver for around USD 20 -30 it
won't matter anyway: Look for US radio to depend on Chinese manufacturing
and Wal-Mart's buying clout?
What you think? Please E-mail