The difference between the experiences of radio
in Britain and the US and later of TV is centrally related
to regulation and financing. In both countries radio stations
were at first set up by manufacturers and retailers to sell
receivers and there was pressure in both countries to use
the medium, which relied on public spectrum, for the public
good. The battle was won by the public broadcasters in Canada
in North America and in Europe in general but by commercial
interests in the US.
That victory set a pattern but at its root is a common factor
- both systems were dependant on the nature of the society
and the regulatory regime. That factor, we would suggest,
is still true but it could end up being changed more by digital
technology than by politicians, assuming that new digital
technology is not strangled by pressures from existing groups
trying to retain their positions.
As digital technology has developed
so has the ability to get more use out of spectrum and also
to use it in different ways and thus the requirement to think
again about the nature of regulation of that spectrum.
On the basis of the amounts paid for mobile phone spectrum
only a few years ago it's quite possible that broadcast media
could be put out of existence in a completely free market
world but we would argue that it would be a dereliction of
duty for any government to allow this to happen because, to
quote from an Ofcom Digital Dividend consultation paper, "
there are some potential uses and users of the spectrum
that could bring additional value to society, but that may
not be able to earn commercial revenues to correspond
So in a new world where digital not only means that more can
be delivered by the same spectrum but that different uses
can be made of it, what approach should regulators adopt for
allocation of the use of that spectrum? And should that approach
dictate in part the way the appropriate technology for a purpose.
A suitable regulatory
approach for digital.
We think the two interlinked questions
we have just raised are a useful start in considering the
best approach but in addition we note that the technologies
that are now creating a massive demand for some spectrum were
not in existence not that long ago.
It therefore seems to us that if the spectrum is to be considered
a public asset, it should only be leased for a fairly limited
period so that there is a fair balance between payment to
the public purse for the right to exploit spectrum commercially
and the a sufficient period to provide a reward for those
who have bought a lease and to provide incentives for those
who might have a new use to develop it in the hope that they
can then in future purchase spectrum rights to gain a commercial
return from their investment.
Licences, in other words, should not be automatically renewed
lest this inhibit sensible future maximum use of spectrum.
Fortunately for radio broadcasters,
the use they make of spectrum compared to that used by TV
broadcasters is modest and the value of that spectrum for
other uses is much less valuable otherwise we suspect there
would already be the same kind of pressure for compulsory
analogue switch-off in radio as there is for TV.
There has also been a significant difference between the way
analogue and digital TV has developed compared to radio in
that for radio technology allows the digital signal to be
transmitted as part of an existing signal OR on dedicated
separate spectrum whilst TV only uses the latter approach.
approach three countries.
The adoption of those different technologies
in different countries has of course related very significantly
to the regulator approach used and here we think it useful
to run briefly through the approach adopted in three countries.
In Canada, digital was seen as a future replacement
for analogue and the regulatory approach was to licence "Transitional
digital undertakings" that were required to largely broadcast
the same signal as the analogue mother station using separate
spectrum and the Eureka DAB system. This approach seems to
have produced the least satisfactory result in that there
was no good reason for most people to buy receivers, particularly
as the spectrum used is in a different band to that used in
most other countries that opted for DAB. The regulator seems
to have recognised this and is now proposing separate digital
licences for stations that can broadcast different signals
as well as considering the use of systems - iBiquity's HD
and DRM (Digital Radio Mondiale) - using part of an existing
analogue transmission for digital.
In the UK digital radio has used DAB and different
spectrum. In its case growth has been boosted by a system
that gave broadcasters an incentive to provide new digital
programming - the automatic renewal of station licences -
and subsequent development of a mass market that has bought
receiver prices down dramatically. The drawback at the moment
is that the system uses MP2 coding, which is less efficient
in the use of spectrum, than the more advanced coding now
available and likely to be used in other countries.
In the US the decision went to the home grown HD in-band-on-channel
system using part of the existing analogue signal thus enhancing
the power of existing broadcasters and keeping out newcomers.
It's too soon to tell so far how far HD will take off but
reports so far do not seem to indicate any particularly innovative
use of the extra signals that are possible - just more music
formats often run on the cheap, sometimes without DJs and
sometimes to air a format for which there was a limited on
We think the record for radio - and
to a degree for TV - is that a society with a choice of different
types of broadcast funding -commercial and public has worked
to the public's best benefit, leading to considerably more
broadcasting of comedy, science, technology, indeed most speech
-based material and also of classic music outside snippets
of the most popular works. In TV the record for entertainment
programming does indicate considerable US success but mainly
we suggest because the size of the market means greater resources
for making programmes.
In addition in the UK the regulatory decision to encourage
new programming on digital has boosted the medium and enhanced
variety and we think we have ended with a fortunate balance.
Based on this experience we tend to approve the idea of separate
spectrum for digital rather than using an existing analogue
system and would note that it also allows greater flexibility
for any future changes in line with technological development.
At the same time we recognise that for coverage of remote
areas AM has advantages over FM and that it may well make
sense to use DRM or HD in conjunction with analogue transmissions
in the short term.
We thus think that the best model is probably one of allocating
separate spectrum for digital audio but also planning for
use at least of existing AM signals to carry digital radio.
In general we think the approach should be to decide what
existing services are so valuable overall that they should
be retained and reserve spectrum for them - maybe as with
TV just digital spectrum in due course - and then let the
marketplace control most of the rest.
We would for example tend to go along with the Ofcom approach
that considers the existing basic radio and TV channels should
continue to operate within specific spectrum reserved for
them, effectively giving a discount to the spectrum, but that
the extra spectrum needed for HD TV should be paid for at
a market rate.
As to settling that rate, a properly designed auction system
seems to work fairly well and as we have already noted we
think that licences should not be automatically renewed but
rather that the existing operators should have to bid again
in due course - we think that at the rate technology is moving
licences should certainly not last for more than a dozen years
so as not to frustrate innovation.
These licensees will retain the advantages of being incumbents
but that is as far as it should go in that if they allow others
without their advantages to outbid them for the spectrum when
it comes up again, then the winner probably has a better use
for it. We go along with the market system at this level!