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The main issues
for radio in 2007
For our final comment of the year, we have
opted to examine briefly the issues we perceive as the major
ones for radio over the past year - those of industry ownership;
consolidation of that ownership; the effects of technological
change; and the role of regulation and legislation.
The effects of technological change are something that governments
cannot control much if at all in some cases -such as the development
of MP3 files and subsequent downloading of audio from the
Internet but in others can pretty well control - as when analogue
TV is switched off, leaving consumers with no choice but to
spend money on new equipment or do without TV. In other cases
they can significantly influence take-up of some changes as
opposed to others through incentives and disincentives.
In considering these broad areas we are working on the basis
that the outcome most conducive to the public interest is
one that will strike the best balance between promoting investment
to develop services and ensuring a range of services and competing
providers that best serve that public interest.
As regards industry ownership we are broadly
against large corporations owning too large a share of companies
controlling broadcast content or new outlets in a market although
less so, providing there is either strict regulation to prevent
abuse of near-monopolistic ownership or a complete monopoly,
when it comes to the transmission chain.
In some ways, indeed, splitting off the transmission side
from the programming side could be good for democracy and
multiple media sources since it reduces the barrier to entry
whilst the current situation enhances the security of incumbents
and increases the value of their holdings but in many cases
seems to do little or nothing to promote local programming
and news coverage.
The same is, of course, true of the adoption of Iniquity's
in-band on-channel HD system for digital radio transmissions
- it preserves the powers of the existing corporations and
increases the value of their businesses but nothing has been
done to ensure that any of the potential benefits go to newcomers
although pious words have been spoken. The cynic might well
compare the lobbying power of the big corporations in the
US with the bribery and corruption of the third world in this
regard.
In practical terms we see little chance that US politicians
will take on the entrenched lobbying powers of the big corporations
whose money they need to get elected but there does seem to
be enough public opinion against further consolidation to
potentially permit it to be limited and at the same time allow
further development of low-power FM: The latter, if allied
with digital transmission, could potentially greatly increase
community involvement in radio without in our view causing
any significant problems for most existing commercial stations.
Our views on this follow on from the comments
above and we have seen no well thought-out arguments in favour
of allowing significant additional consolidation in US media.
We also do not concur with arguments that by allowing cross-ownership
of broadcast stations and newspapers there will necessarily
be any overall increase in local news and public affairs coverage.
Far sounder an approach in our view would be to set a reasonable
rate of return on investment in broadcast equipment and programming
allied with public service requirements attached to licences:
If the return falls close to these levels then reconsideration
would be allowed but otherwise licence renewal would be automatically
denied if the requirements were not met.
This would, of course, be anathema, to the current licence holders
whose stock would fall initially but we suspect that in the
long term there would be a reasonable balance reached in terms
of private profit and public interest albeit it would be tiled
more to the latter than is currently the case in the US.
Technological change.
For radio the technological changes that particularly
affect the medium are now matters of uptake rather than
immediately foreseeable advances -- the main digital
systems are now in place for digital radio transmission
as are technologies to download from the Internet, to
store audio digitally on portable devices; and to receive
the Internet via wireless devices.
So far as the marketplace is concerned the major take-up
worldwide has been of Internet listening and downloading
for use on portable devices with some success for Eureka
DAB digital radio in the UK, significantly in part because
of regulatory action in adopting a stick and carrot
approach - analogue licensees (whose licences were not
automatically renewed in the UK) were guaranteed renewal
if they provided a service on the local digital multiplex.
The UK approach ensured additional services were available
on digital receivers thus helping create a market that
in turn allowed production of receivers at levels that
allowed significant price reductions.
In contrast to this the Canadian approach used DAB but
actually prevented provision of different services,
thus reducing consumer incentives to purchase receivers.
In the US, adopting iniquity's system without imposing
any conditions regarding licensees' use of the spectrum
seems outside the country to have done little to add
genuine viable alternative programming outside the services
of public radio.
Indeed it can be argued that if anything the regulatory
system - which not only allowed licensees to keep their
existing control of spectrum but did not require them
to make use of it or to offer it to others and also
through copyright law (The Digital Millennium Copyright
Act) imposed charges on suppliers of digital audio that
do not apply to terrestrial analogue transmissions -
is a brake on the uptake of digital.
The role of regulation
and legislation.
The above takes
us on to the role that regulation and legislation
can play. We referred in our second paragraph
to the decision to switch off analogue TV, thus
forcing consumers to take-up digital.
Unlike the adoption of MP3 players and I-Pods
(and earlier of the Sony Walkman), the decision
is not one of consumer choice or the marketplace
but rather a combination of politics and accounting
sleight of hand that moves costs onto consumers
and many of the benefits to others -those who
will benefit from the spectrum thus released
including the government through what it will
collect for spectrum licences and the users
of the spectrum.
Whilst we can see that it may be in the longer-term
public interest to make the switch for TV, where
the spectrum released is of great value for
other communications purposes, the costing of
the change nevertheless in our view is a confidence
trick if they do take into account the money
that people will be forced to spend on digital
equipment and of disposal of the analogue equipment
that becomes junk because of the switch, even
if the cost is really one of moving purchases
of new equipment forward in many cases rather
than forcing a purchase that would not otherwise
be made.
For radio the situation is different - the HD
system that uses part of existing analogue spectrum
for the digital signal means there is no general
release of spectrum for other purposes and where
different spectrum is used for digital radio
as in the case of Eureka DAB, the spectrum released
is of very little value compared to that of
the TV spectrum freed up by dropping analogue
transmissions.
There is pressure from commercial interests
in the UK - and there will be elsewhere - to
switch off analogue as a way to increase digital
take-up on which commercial companies have spent
money without getting returns.
That pressure we think should be rejected since
the cost of replacing the many analogue radio
receivers that people have (In our household
as well as two digital radio receivers there
are at least five analogue portables plus a
good quality AM-FM-short wave receiver) for
no real benefit to the consumer will for a long
while outweigh the benefits to consumers of
digital: This particular decision should be
left up to the consumer (Already the combination
of extra services and reduced receiver prices
has led to some five million receiver purchases
in the UK alone).
We think therefore that in the case of radio
the best way forward for digital is a combination
of stick and carrot - stick so that licensees
cannot simply hold on to spectrum that would
be better used by others (In the US we would
have required licensees as a condition of licence
to free up at least one HD channel for allocation
to newcomer broadcasters with revocation if
this were not available within say a year of
them starting HD transmissions and also to forfeit
the HD spectrum completely if within 18 months
of an external organisation expressing interest
and showing finance to provide equipment to
broadcast HD on the station's frequency had
they not commenced their own HD broadcasts).
We also think in regulatory terms that in the
long term the public interest would be better
served by an equal playing field for digital
and analogue broadcasters than by allowing the
current exceptional exemption from performance
royalties for the latter as in the US, although
as per our March 2007 Comment (2007-03Comment.html)
we think there would be a benefit in creating
a number of classes of copyright, thus producing
a market pressure on copyright holders to keep
their prices reasonable or lose airtime, a situation
that would quickly show whether the NAB or recording
companies are correct about the value of the
promotion that music gets from airplay.
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What you think? Please
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your comments.
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