December 2006

Broadcast regulation for a digital age.

Broadcast regulation for a digital age.

The impact of regulatory regimes and the future of radio.

Over the past year the regulators seem to have started serious consideration of the impact of a digital world on broadcasts, moving towards switching off analogue TV. At the same time as much of the commercial shine has come off radio in the US and Britain - bringing together the twin elements that in our view have been at the heart of broadcasting since its inception - regulation and funding.

There has however been a significant difference when it comes to listening with the medium holding up better in the UK: The question is why?
Our view is that it's not technology that has made the main difference but mainly a matter of content.

The further questions then arise as to whether regulators can play a positive role and whether there are lessons that the regulators in different countries can learn from the experience of their counterparts elsewhere.

Public v commercial broadcasting.

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.

Digital approaches.

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.

Radio broadcast 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.

The regulatory 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 analogue.

Our preference.

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!

What you think? Please E-mail your comments.

Comment index ........ E-Mail us with your comments
Front Page About this site Freelance bulletin
Site audio files Radio Stations Other links Archives Index Comment Pages Your feedback Browsers
players, 38 Creswick Road, Acton, London W3 9HF, UK: