[HCDX] It?s Radio, Jim, But Not as We Know It

["Horacio A. Nigro" <hanigro@xxxxxxxxxxxxxx>]

 From Radio World Online at
http://www.rwonline.com/reference-room/trans-2-digital/rwf-digital.shtml
 
 
04.11.01 
It?s Radio, Jim, But Not as We Know It

IBOC, DRM, Satellite, Eureka ? The Chief Executive of Digital One Calls for
a Combination of Technologies to Satisfy Market Needs 


by Quentin Howard


The author is CEO of Digital One, the national commercial digital radio
multiplex in the United Kingdom.


Who would dare predict the future in print? Nostradamus for one. And me. I
predict that analog FM and AM radio will appear a pretty thin offering in 10
years? time when compared to other media and delivery platforms emerging now
and yet to come.

Radio has served us well since 1922. It has survived the onslaught of
talking movies, television, LPs, cassettes, CDs, MiniDiscs, cable,
satellite, DVD and MP3. People like radio, and listen for more than 20 hours
a week. Radio as a device is the most ubiquitous of consumer products ?
every household has around six sets. Eighty million new radios sell each
year in the United States, and a similar number across Europe. 

It is a century since Marconi received Morse code across the Atlantic, and
80 years since public broadcasting began. Radio is undoubtedly the mass
communications medium of the 20th century ? influential, cultural,
politically powerful, entertaining and informative. In fact, radio is so
popular you?d think it would figure centrally in every debate about media.
It doesn?t.


Ignoring radio

In December 1997, the EU Green Paper on Convergence almost completely
ignored radio, concentrating instead on television and the internet. In the
UK, the current White Paper on communications regulation and media ownership
devotes only one percent of its pages to the subject of radio. 

In France last yea, a similar thing happened, and elsewhere radio is
consistently undervalued, both as a medium in its own right and as a
consumer item.

Little wonder, then, that whilst politicians are busy helping industry to
shape the future of television, satellite, mobile phones and the Internet,
radio broadcasters ? who face exactly the same issues in going digital ? are
left to struggle alone. The results are unclear business models, slow uptake
and a consequent wavering of commitment. 

Dateline spring 1991, the National Association of Broadcasters convention,
Atlanta. Eureka 147 is unveiled to the world and everyone applauds. NAB
President Eddie Fritts declares that Europe is five years ahead of America
and NAB recommends the United States accepts the Eureka system. 

Three months later and NAB rescinds this, claiming equal transmission areas
for all stations on a multiplex would damage individual marketing abilities.
Cynics have a different interpretation: U.S. broadcasters don?t like the
thought of more radio channels or competition, and U.S. consumer equipment
manufacturers would stand to gain nothing from European-owned royalties and IP. 


Different approaches

Largely as a result of misinformation, the gulf between the U.S. view of
digital radio and the Eureka view has grown over time. 

Europe and the United States take very different approaches to radio as an
industry. Europe is a mix of state-run public broadcasters and private
commercial radio in various degrees of maturity. Competition is still on the
increase and the concept of more radio channels is seen as an opportunity,
not a threat. 

Contrast this to the United States, where station owners rejected Eureka?s
opportunity largely to protect the status quo.

In 1994, the world shared out new spectrum for terrestrial digital radio,
which could mean worldwide conformity and compatibility. Most countries
signed up to this new spectrum, including all of Europe, Asia and Canada.
But U.S. broadcasters favor re-using existing FM spectrum for a system ?
unproven at the time ? called IBOC. 

Throughout the 1990s, NAB conferences on the respective merits of digital
came close to degenerating into playground name-calling: "My system?s better
than your system." The only practical outcome of these squabbles was to
unnerve Japanese receiver manufacturers, who prefer a single world market
and a common standard. 

Consequently, although more than 20 manufacturers have made and sold digital
radios to the Eureka format, the critical mass necessary for volume
manufacturing, which in turn leads to rapid falls in silicon cost, has not
yet happened.

Fast-forward to the year 2000: Eureka 147 DAB is rolled out in over 30
countries with more than 400 digital radio services on-air and 300 million
people within range of multiplex transmission. Of those countries committed
to a digital radio system, only the USA and Japan have not adopted Eureka. 

After eight years searching for a viable US alternative, the main contenders
developing IBOC ? USA Digital Radio and Lucent Digital Radio ? merge their
efforts to form iBiquity Digital, a company owned by broadcasters as a
vehicle to exploit the IBOC technology IP.


IBOC?s marginal benefits

There is no doubt that IBOC has clear advantages for a U.S. broadcaster who,
by adding a digital exciter to an existing FM transmitter, can simulcast a
digital version of his service. Providing the interference caused to and by
other FM services works out, IBOC is likely to prove the cheapest way to go
digital.

Where the argument gets muddied is in the assumption that what works in the
United States will work everywhere else. FM frequencies and transmitter
powers are planned to very different criteria on either side of the Atlantic
and this, amongst other things, may prevent IBOC getting a look in. 

People are amazed that whilst a New York City FM station may boast 50,000 or
100,000 watts, the equivalent FM in London is limited to 4,000 watts. And
whereas the USA has 9,000 FM transmitters, across Europe, more densely
packed and smaller geographically, there are 23,000 FM transmitters. 

IBOC as currently engineered would probably make the existing European FM
spectrum plan unworkable. 

Whilst Eureka has been building its networks and, as some would have it,
waiting for manufacturers to honor their supply promises, and whilst the
United States is still waiting for IBOC to happen Big Time, new rival
digital radio platforms, which may yet prove how fragile the radio ecosystem
really is, have already arrived. 

Perhaps IBOC and Eureka 147 should take stock for a moment and realise that
they both have more in common than either would like to admit.

For a start, both need to persuade manufacturers to invest significantly in
research and development, and to manufacture new radio receivers. 

To achieve mass market penetration there is only one issue: the retail price
of a digital radio. Consumers have a perception that radio is already almost
a zero cost addition, or that a stand-alone radio is low-ticket, sub $50
item. So why would anyone purchase an expensive digital radio? 

The IBOC content proposition means digital radio offers exactly the same as
analog and the only marketable difference is the quality upgrade of AM
stations, plus data. It is doubtful that consumers will value this at more
than a few dollars, insufficient to meet the delta cost of adding IBOC
technology to any audio device. 

The challenge for the United States is to make IBOC radios for essentially
the same price as existing FM/AM devices. 


The role of DRM 

This same challenge faces Digital Radio Mondiale too, the digital shortwave
and AM replacement system. 

Whilst DRM?s audio quality doesn?t bear too close scrutiny, and finding
simulcast spectrum for a dual-mode AM transition strategy will be a task in
itself, there is possibly a role for DRM in long-distance and domestic rural
broadcasting, provided the receiver cost is not prohibitive. But DRM is
unlikely to be successful as the sole digital replacement technology. 

Unlike IBOC and DRM, which essentially offer listeners "the same only
different," the Eureka proposition offers perhaps twice as many radio
channels as current analog availability, plus multimedia data applications
and flexible digital audio quality. This is ultimately more compelling and
therefore may be able to command a premium on the final consumer price, but
still there is a big gap between current DAB component costs and the
relatively small retail premium attainable.


The subsidy debate

With both IBOC and Eureka, the question of subsidy of receivers to
kick-start the market arises. 

Any broadcaster contemplating subsidy, other than for a marketing stunt,
would be mad. Subsidy is like a drug ? once started, it?s hard to come off,
and it serves little purpose other than to allow the retailer/manufacturer
to maintain margins which the broadcaster pays for through the nose. 

The plain fact is that subsidy is only applicable where there is a
subscription income stream from the end user to pay for it. One of radio?s
great virtues is that it is, for the main part, free to air.

Yet without intervention, the receiver market will be very slow for both
Eureka and IBOC. Meanwhile, alternative platforms are emerging, some
overhyped and ultimately inconsequential, others which should be taken more
seriously. 

For $10 a month, U.S. consumers can subscribe to either XM Satellite Radio
or Sirius Satellite Radio, which promise to deliver 100 channels apiece. The
subscription income immediately allows in-car receivers to be subsidized
and, with additional substantial investment from car manufacturers, it is
likely that satellite radio receivers will emerge more quickly than other
digital radio devices in the United States.

Whether people will quickly get bored with DJ-free music services is
debatable, and my money is on a gradual return to real radio with announcers
and DJs doing what?s been working well since the 1920s.


Limited capacity 

WorldSpace receivers are appearing in discount electronic retailers in
London and in abundance in duty free shops. Simultaneously, we wonder if the
WorldSpace satellite is having trouble with its on-board guidance controls?
Suddenly it appears that its beams are receivable in Europe ? not bad for a
service aimed at continental Africa! 

Proponents of satellite radio in Europe seem to have glossed over the
obvious shortcoming that whatever capacity exists has to be shared between
20 nations, each with its own language and culture. Unlike U.S. satellite
radio, the offering relevant to one country will be severely limited.

Critics of satellite radio point to the need for terrestrial repeaters to
provide adequate city coverage and any hope of in-building penetration, and
this requires yet more spectrum. Some would go as far as to label it a back
door means of achieving conventional terrestrial radio with the bonus of a
satellite repeater. 


Internet or UMTS?

The Internet is losing its gloss all round, including as a viable
alternative means of delivering radio. Broadcasters who rushed to set up
audio streams and stake a claim to cyberspace now realize that it is limited
and expensive. 

Broadband connection is essential, and even then the share of radio
listening by Internet is minimal compared to traditional radio reception.
The commercial value of a Los Angeles listener to a radio station in Paris,
France, is nil. I.T. managers hate it when corporate networks clog up with
multiple radio feeds, and ADSL backbones congest when too many users access
high bandwidth content. 

One of the world?s largest broadcasters reckons its maximum capacity of
30,000 simultaneous Internet streams costs up to $30,000 per hour (including
server, throughput and licensing). Compare that to the $100 per hour of a
national digital transmitter network reaching unlimited millions, and it
isn?t hard to see that the efficiency of the broadcast model is way ahead of
Internet streaming. 

The same limitations apply to mobile phones which, for all the promise and
hype of UMTS, cannot provide even a fraction of a percent of the capacity
terrestrial radio broadcasters need. Moreover, listening to radio on a
mobile phone connection is never going to be free to air. 

In any analysis, terrestrial radio remains the most powerful and compelling
consumer proposition. Digital radio adds considerable value to the
proposition, yet keeps all the attributes of existing radio. 

IBOC will be made to work and may be successful if the consumer appreciates
the marginal benefits. Satellite is dependent on geography and subscription.
DRM may find favor in limited markets, starting perhaps with international
broadcasters. The internet and mobile phones are extension platforms, not
replacements. 

Meanwhile, Eureka has already gained considerable momentum and commitment
which will ensure its continuance. 


Combine technologies

So is there a clear way forward without confusion? One realistic option is
to encourage a combination of technologies to satisfy market needs. 

In countries like Australia, DRM would be ideal for the outback and Eureka
for its metropolitan cities. Such a strategy could work with other system
hybrids too, and with a big change in attitudes to system rivalry, a
successful roadmap can be built which sees receiver manufacturers making
worldwide devices with standardized optional modules inside for IBOC,
Eureka, DRM. 

This could ensure the success of all the digital radio systems rather than
the damaging and expensive likelihood of market failure for one or more of
them. Ultimately the consumer isn?t driven by the best technology, he just
wants a radio that works and we should be capable of delivering that to him. 

RW welcomes other points of view.
 
Horacio A. Nigro
Montevideo - Uruguay
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