August 2003

Digital success and regulation.

Digital success and regulation

The experience of digital radio so far in the Canada, the UK, and the US provides a good example of the way regulation can impact on the success of a technology, in this case from negatively to positively with an unknown so far. Indeed without too much straying into a phrase four the sake of it, we could term developments a case of The Good, The Bad and the Ugly. So let's look at them- but in a different order to end on a positive note.

The Bad.

Canada is an example of the negative since although the state broadcaster has taken up digital broadcasting so far there has been little enthusiasm in the commercial sector and those companies who have taken the plunge have so far spent considerable amount with little return and the public have gained little extra in terms of available channels.

The reason? The Canadian Radio-television and Telecommunications Commission (CRTC) decided that digital signals should be simulcast on analogue, either AM or FM, thus meaning that digital stations, instead of expanding the range of signals available and targeting new niche audiences, had to stick mainly to the existing tried and tested output that their owners already broadcast on analogue.

In its early plans some eight years ago, the Commission endorsed the Department of Industry plan to allocate spectrum in the digital radio band to each existing AM and FM radio undertaking and, although it did consider diversity and add that "existing radio services should have priority access, but not exclusive access, to the digital radio band", it effectively concentrated on making digital a replacement for existing analogue services. It then compounded the error in practical terms by deciding that "In the case of an Experimental Digital Radio service operated by an existing AM or FM radio licensee, it would be a requirement that all programming on the Experimental Digital Radio service be a simulcast of the programming broadcast on the associated AM or FM radio undertaking, with the exception of up to two hours per week of separate programming."
(RNW note -following comment on its proposals the Commission extended this period to 14 hours a week of separate programming which in our view was a waste of effort since at the most a station could either have a short slot a day or a day of the week to show what extra it could do and neither of these would make it worthwhile to develop new niche services).

To make things even worse the commission proposed that, "during the short term, Experimental Digital Radio undertakings be prohibited from using the ancillary capacity of the spectrum allotted to them to provide a programming service. "

This might well have been welcomed by existing licensees at the time - it seemed to protect their position, after all -- but they were being shortsighted and unimaginative since the effect was to leave digital without any compelling plus factor for an audience apart from an improvement over technical quality plus some extras in terms of screen display information that would not enough in itself to tempt most people even if receivers were fairly cheap. They weren't and the Catch 22 factor then came in meaning that manufacturers would not invest in mass production without a mass audience but without them prices would remain too high.

A bad decision that we suspect was made largely through too much attention to what was than to what might be possible. Enough of the bad though!. What about the ugly?

The Ugly.

In terms of using the medium of digital to expand opportunities, the US option is one that we have increasingly come to see as the ugly, tempered only by the introduction of satellite radio services that are offering new and different programming. The reason? It seems to us that the concern was biased far too much towards satisfying existing licensees and their commercial interests rather than using the opportunity to expand real choice to US audiences.

The US has opted for a system that uses part of the existing analogue signal to carry a digital stream - more of the Canadian approach but with less of the technical quality benefit.
In addition the main motivation-understandably in the context - of US radio companies seems to be that digital's main benefit is that it provides via the text screen more opportunities to sell things rather than that it could provide more and different programming with an associated improvement in technical quality.

The satellite companies provide the latter -and we'd like to see some high quality assessments of how its quality compares with that from Ibiquity's in-band on-channel digital approach - together with more choice and considerable freedom from the overblown diet of adverts required on most US commercial stations to repay the high prices that licences ( a lease on public spectrum) now command.

All in all a wasted opportunity that in our view seems to have been motivated by bean-counters calculations rather than any other interests.
In the end we can't really whip up any enthusiasm for the system: its benefits are much less than could have been achieved and we rather feel that the best thing that could happen in the US would be the development of other technologies such as software radio with minimal regulatory restrictions and costs that could effectively allow many new entrants to serve new audiences with something different.

We're also concerned that the current benefits that a traveler gains from the universality of analogue services - a fairly inexpensive portable AM/FM/short wave receiver can get services almost anywhere in the world - and that will be lost in the US as far as digital is concerned since its system is out of step with the rest of the world. So from a selfish point of view, we've more interest in the failure for the benefit of the world of iBiquity's system than in its success for the rather limited benefits it will offer in the US.

Add in the fact that we suspect the vested interests of current US media empires will do their best, as they did with low power FM, to prevent developments of technologies that would genuinely pull in new competing services and we conclude the description Ugly may well be justified as a description of US digital radio plans although we'll be pleased if we are proven wrong.

The Good.

Rather to our surprise, the UK approach seems to have been the most productive, albeit some of its strength comes from the existence of the BBC, an existence that many current media interests would like curbed or even, though they are not generally honest enough to go public this far, killed.
It provides a spur for commercial radio to do some things differently and in some cases serves niche audiences with parts of its service that has led commercial interests to spot opportunities for themselves.

Whatever the effect of adding the BBC to the equation, the policy of carrot rather than stick for commercial operators has worked. If they provide a digital service they are guaranteed an analogue renewal and this has kept them onboard during the difficult years when it might have seemed to the fainthearted that digital radio wasn't going to catch on.

Three years ago we commented (RNW Comment October 2000):"The current downside is of course the cost of the receivers, which will have to come down dramatically for mass take-up unless the commercial lobbyists succeed in getting AM and FM closed down!"

We still don't really think that what we think off as the non-radio extras that digital offers as being that valuable or enticing (RNW Comment November 2000) but we do appreciate the combination of technical quality and new services that the British system has now delivered.

The commercial calls for the ending analogue as a boost to digital seem to have died down as digital has become more popular because of the massive reduction in DAB receiver prices allied with the availability of digital radio on digital TV services in the UK.
In terms of value, as we reported this month (See RNW Aug 9) is already accounting for around half the sales by one major UK electrical goods chain and this in turn is spurring the development of more receivers by manufacturers.

Only a few years ago, DAB cost GBP 500 or so and could receive comparatively limited services; now, both home and portable receivers are available from around GBP 100 upwards and there are a number of worthy new services.

We think the system knocks spots off the other options available in major English-speaking countries and can only hope that it's a model that is followed elsewhere; Canada, had it the will, could move towards it without technological change and it would seem a better way for Australia to go than the US system.

Eureka !(147) as was once said.

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