January 2008

Digital - What's the point?

Digital - What's the point?

As with so many questions of this type, the answer depends on where you start from and with digital radio there are many starting points. So first let's consider what digital does in technological and resource terms, the base from which in our view we should start.
In essence by going digital, much more can be crammed into the same spectrum since only changes have to be described as opposed to an entire signal moved - and changes through coding can be very efficiently described.

To the scientist and technologist there is an elegance in this; to the engineer a series of choices as to how far to go for improving technical quality as opposed to putting more signals into the spectrum available; to the accountant the split of the above that will yield most revenue; and to a government the same from a different perspective - namely what it can get from the spectrum released by kicking existing users off their spectrum balanced against the level of complaints from those who will lose - government's certainly don't seem to care about a public having to collectively spend z-billions on replacement equipment (whether or not they benefit much) so long as they can get the highest fraction of z into their coffers.

A hidden tax in effect combined with redistribution of costs, much the same as many automated answering machines force the caller to spend time and money saving the organization's costs but frequently with much less service to the caller than a more expensive human might provide.

Applying the above to radio.

The most important factor in our view in the difference between the way radio has fared compared to TV comes down to the auction value of the spectrum it uses: TV spectrum is massively more valuable for mobile communications so from a governmental point of view the return it gets makes any hassle well worth while. There's also the benefit of being able to point to an obviously cleaner picture and the potential purchase of HDTV.
In the case of radio the benefit-to-cost ration is far less for all involved, which is not to say that there is not a good case for digital radio but does significantly alter the equation.

On the plus side, there are potential benefits in terms of quality - if broadcasters want to opt for audio quality rather than extra services - but they are not as obvious and in many listening situations are not particularly great. There is also the potential for more channels but if this is to be used for more slicing of musical genres, we don't see major commercial potential in the extras.
We do, however, see significant potential benefits in terms of community stations but that would require considerable changes in regulatory attitudes in various countries, particularly the US

So let's backtrack a moment. Technology has been developed that, within existing resources, can allow a combination of higher quality audio and extra channels (as with HD and digital TV compared to analogue).

The question then arises as how to make the best use of this additional public resource - and we stress the word "public" because the resource is one that belongs to all, not to broadcasters or telecommunications companies who can corrupt politicians to maximise their profits rather than the public good, but to the public.

There should therefore have been adequate public debate on the options before moves were made to introduce particular systems and we rather suspect that had this been done, there would have been no HD radio: We conclude later that the best bet for this is for the US to provide DAB spectrum and if this is taken up let market pressures force iBiquity into collapse, make the technology available without fees, and allow the market to develop a new world receiver that would encompass AM/FM/SW/DAB/DRM and HD.

Options for digital radio.

Continuing our thoughts from the above, HD is obviously a terrific way to go digital - assuming it catches on- for existing broadcasters who gain further resources from the public sphere without making any additional payments. It's a supposed market approach that in our view is nothing of the kind but is more of a corrupt handout to the already powerful.

So what were the options? In essence they were to use separate spectrum for digital - the DAB approach for FM being the prime example of this approach - or to use part of existing allocated analogue spectrum for digital - the iBiquity in-band-on-channel approach.

It will be no secret to those who have read us for any time to find out that we are in essence in favour of the first option. The prime reason for this is inherent in what we have said above and a secondary reason is that it is much easier for regulators within the DAB approach to encourage extra services for the public albeit it is not automatic: Australia, for example, is ensuring that existing broadcast licensees will have a DAB monopoly for an initial period and thus in public interest terms is offering no major benefits over and above those that HD could provide.

The UK has done a better job in our view by allowing new players in and at the same time ensuring that existing services also have a motive to support the system by granting automatic renewal of analogue licences where the licensee is providing a service on the relevant digital multiplex.
Canada went for the worst option in our view, by initially limiting DAB transmissions to simulcasts of analogue programming although it has subsequently reversed this decision.

What has been done so far by regulators, therefore, varies from protecting the interests of existing analogue broadcasters but also providing a platform for new services (the UK) to further entrenching the dominance of existing licensees (pretty well everywhere else).

What should have been done.

In our view this outcome is not in the best overall public interest although there are strong arguments for the approach adopted by the UK in that for digital to succeed the platform does need to have popular services - which inevitable will initially be existing analogue services - as well as addition ones. The argument in terms of better technical quality is in our view totally inadequate as a reason for people to dump their analogue receivers and we continue to think, as we have often said, that analogue should not be switched off.

So how would it be possible to maximise the public benefit from the additional potential that digital brings?
We take the view that in a rapidly changing communications world, wireless internet can potentially bite very deeply into music FM - it would bite even further were the US Congress to forget lobbying and go for the logical and fair approach of equal treatment for all as regards recording royalty payments, which would mean terrestrial radio paying them as others have to but with amendment of the rates to be paid (and we still think a number of tariffs as we suggested in our March 2007 Comment would be preferable to the existing one-price-for-all system since it would bring in some potential market incentives into the thinking of copyright holders: If they try and charge too much they would actually lose in our system).

This means that in consideration of the maximum public benefit the interests of most commercial radio - which rides on the back of the recording industry - need to be significantly discounted, although obviously not disregarded.

We would therefore suggest that the first move that needs to be made is to separate the platform and broadcaster: This happens with DAB where a multiplex operator provides the platform for a number of services and it ought to have been a quid-quo-pro of selecting HD as the sole system in the US where in our view broadcasters should have had to face the prospect of losing analogue licences if they did not provide digital services together with a requirement of providing at cost plus say 5% a platform on all but one digital channel for other broadcasters: Whoops- that would have killed HD!

Go for a true market approach.

So let's do just that: Go for a true market approach - leave HD as it is, provide spectrum for DAB (and also DRM) in the US and see if there is sufficient interest from a combination of commercial and community broadcasters to make it viable.

We rather suspect here might well be in major cities (there would be no development costs since both transmission systems and fairly cheap receivers have already been developed for DAB/DRM elsewhere in the world and will be developed further as major players such as China and Russia ramp up their broadcasts).

If there is and DAB becomes successful we suspect HD would die or have to be made available worldwide withotu licensing costs. This would mean egg on the face of the FCC and wasted investment by broadcasters who have gone to HD unless they use their lobbying power and resources to buy out iBiquity and make the technology freely available to all without charge, thus meaning that manufacturers, who are already developing AM/FM/SW/DAB/DRM receivers would probably add HD.

That way strikes us as far more productive for the public interest everywhere than the situation that currently exists. If the finances were right for the development of such multi-standard receivers the end results would be that the market would see to their development; there would again be worldwide receivers whose price would fall considerably; broadcasters would have incentives to use all the platforms according to demand; and listeners would gain additional commercial, public and community services.

The downside in terms of egg on face in terms of the US and HD would be one we would consider fully deserved as would any additional costs to US broadcasters who preserved their own interests at the expense of those of the public but the upside would be tremendous for the medium and ultimately for adoption of all the technologies concerned worlwide where appropriate. It might even mean HD getting used a lot more widely than it is likely to be at the moment.

What you think? Please E-mail your comments.


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