Consultation outcome

Consultation on national commercial digital radio multiplex licences 2021

Updated 31 January 2022

1. Foreword

Radio remains extremely popular in the UK, with almost 9 in 10 adults listening to their favourite stations every week. The broad range of world class programme output by UK broadcasters means that radio audiences are able to enjoy a wide choice of genres and can listen to stations through a variety of means. As well as being loved, radio is trusted. Throughout the COVID-19 pandemic, radio has been a trusted source of news and information for millions of citizens.

Although radio’s popularity with listeners has endured, it is changing. The past decade has seen a significant shift in radio consumption habits with more people choosing to listen to their favourite stations on digital devices. This change in listeners’ behaviour meant that in 2018 digital radio became the default mode of listening when its share exceeded 50%. Digital now accounts for 58.6% of all radio listening.^{[footnote 1]}

This shift to digital has significant implications for broadcasters and the operators of radio networks - for example, the terrestrial digital (DAB) radio platform has become the single most popular method of accessing radio content in the UK. Commercial radio’s investment in the two national commercial DAB multiplexes, the licences for which are held by Digital One Limited and Sound Digital Limited, has allowed for the development of new national digital radio services, offering more choice than ever before for listeners - examples include Capital Xtra, Scala and Virgin Radio.

It is important that the two national radio multiplexes continue to underpin national commercial digital radio services and benefit listeners for the foreseeable future. With the Digital One multiplex licence due to expire in 2023, we believe it is the right time to give consideration to the policy on the licensing and renewal of the two national DAB multiplex licences.

Commercial radio broadcasters face significant challenges in recovering from the impacts of the pandemic and dealing with the disruptive competition from online audio content services and smart speaker platforms. In this context we believe it is important to provide commercial radio operators using these two networks with clarity and certainty about the future of the platform and ensure there is no disruption of the services broadcast on the Digital One network (and SDL network) at the end of the licence period.

Today the government is publishing this consultation to help inform our decision about the approach to the future relicensing of the two national commercial radio multiplex licences. We are interested in receiving views from stakeholders on the policy options that we have set out in this document. Our overall ambition is to ensure that the relicensing process for these national radio multiplexes works in the best interests of the commercial radio industry and audiences across the UK.

Rt Hon. John Whittingdale OBE MP
Minister of State for Media and Data

2. Executive summary

2.1 Background

The past decade has seen a marked shift in the consumption of radio. Listening via digital devices is now the primary means of accessing radio services, with figures for Q1 2020 showing that digital accounts for a 58.6% share of all radio listening.

National commercial digital radio stations are broadcast via two national DAB multiplexes operated by Digital One Limited and Sound Digital Limited.^{[footnote 2]}

• Digital One Limited (owned by Arqiva) - launched in 1999 and which carries the three national analogue commercial services: Classic FM, TalkSport and Absolute Radio and 17 other services. The service reaches around 91% of UK homes.

• Sound Digital Limited (owned by a consortium - Arqiva 40%, Wireless Group 30% and Bauer Media 30%) - launched in 2016 and following improvements made in 2018 now reaches 83% of UK homes.

Between them, the two networks provide access to 40 free-to-air national commercial digital radio stations.

Ofcom - the UK’s independent communications regulator - regulates the national commercial radio multiplex licensees (the BBC’s national digital radio multiplex is regulated under the BBC Charter and Agreement). The Broadcasting Act 1996 only allows national multiplex licences to be renewed on one occasion if the licence was issued within the first ten years of commencement of the legislation. Therefore, the national DAB multiplex licence issued in 1999 to Digital One Ltd for two terms of 12 years (a total of 24 years) is set to expire in November 2023. The Sound Digital Ltd (D2) licence, issued in 2016, runs for a single term of twelve years until March 2028. Under existing legislation Ofcom does not have a power to renew the national commercial radio multiplex licences beyond their current expiry dates.

The two national DAB multiplexes have become an essential means of distributing national commercial radio services and programme content and have been successful in opening the national airwaves to more commercial radio services and allowing commercial radio to compete with the BBC. It is important that this platform continues to benefit listeners in the future. With the licence held by Digital One Limited due to expire in 2023, we believe it is appropriate to give consideration to the policy on the licensing and renewal of the national DAB multiplex licences to give the commercial radio operators who use these networks clarity and certainty about the future of the platform and ensure there is no disruption of the services broadcast on the network operated by Digital One Limited at the end of the licence period.

The aim of this consultation is to seek views and collect information to inform our decision about the future licensing process for the national commercial radio multiplexes. This consultation document describes the policy and regulatory issues, lists the policy options for consultation and sets out our key questions. At this stage, we have no preferred option.

2.2 Licensing options

We are seeking views on the following options:

• Option 1 (do nothing): allow the two national radio multiplex licences to expire and be re-advertised through an open competition for a 12 year period by Ofcom in accordance with the existing legislation;
• Option 2: amend the Broadcasting Act 1996 to allow a 12 year renewal for the licence currently held by Digital One Limited and a shorter 7 year renewal for the licence currently held by Sound Digital Limited, to align both expiry dates to a common December 2035 date;
• Option 3: amend the Broadcasting Act 1996 to allow a shorter 7 year renewal for the licence currently held by Digital One Limited and a 2 year renewal for the licence currently held by Sound Digital Limited, to align both with the expiry dates of the local DAB multiplex licences in December 2030.

A shorter renewal of the licence currently held by Digital One Limited for a 7- year period (with the D2 licence being renewed for 2 years) would have the benefit of aligning the expiry dates with the existing end dates for most local radio multiplexes in December 2030. This would harmonise the expiry dates across national and local commercial radio multiplex licences and provide an opportunity for a more strategic approach to be taken to the use of broadcast spectrum by commercial radio in the 2030s (e.g. by allocating more spectrum to national, local or small scale DAB services). A longer term renewal until 2035 would provide national broadcasters and the multiplex licence holders with certainty and stability that would in turn help support government objectives to support a listener-led transition of radio to digital.

2.3 Additional considerations

We are also seeking views on issues linked to the offer of a further renewal (whether to 2030 or to 2035), namely:

• whether a renewed licence should include obligations for a higher level of DAB coverage;
• whether in offering a renewal to 2030 or 2035, there is a need for a mechanism to protect stations carried on either national multiplex from future carriage fee rises charged by national commercial radio multiplex operators.

2.4 Scope

This consultation will not consider the renewal process for the BBC’s national digital radio multiplex, which is regulated separately under the BBC Charter and Agreement. Furthermore, all local digital radio multiplex licences - where the licence holder has built out local DAB coverage to Ofcom requirements (set in 2013) - have rights to a renewal from the initial expiry date (12 years after issue) until December 2030. The relicensing of local DAB multiplex licences is also out of the scope of this consultation.

2.5 How to respond and timings

The consultation period began on 22nd July 2021 and runs until 14th September. Please ensure that your response reaches us by the closing date. You can contact nationalmultiplexconsultation2021@dcms.gov.uk if you need alternative formats (Braille, audio CD, etc.). Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome. When responding, please state whether you are replying as an individual or representing the views of an organisation and where applicable how members’ views were assembled.

Please email responses to nationalmultiplexconsultation2021@dcms.gov.uk. Due to present remote working arrangements it is difficult for us to accept hard copies of responses but please let us know if you are unable to respond by email.

This consultation covers the United Kingdom. We welcome comments from all stakeholders who may be interested.

The closing date and time for responses is 5pm on Tuesday 14th September 2021.

2.6 What happens next

The government will set out its response to this consultation following the closure of the consultation. If the government subsequently decides to proceed with option 2 or option 3, we would amend the relevant legislation by a legislative reform order to give Ofcom the power to further renew the licences. Before doing so, we would carry out a second consultation on the specific proposals as required by section 13 of the Legislative and Regulatory Reform Act 2006.

3. Policy and regulatory background

3.1 Development of digital radio

The UK is fortunate to have a diverse and vibrant radio sector comprising national and local commercial radio stations, small community and not-for-profit radio and BBC national and local radio services. In spite of the emergence of music streaming, podcasts and other, online audio services, radio continues to be a popular broadcasting medium with nine in ten (89%) of all UK adults tuning in to their selected radio stations - and consuming almost a billion (988m) hours of listening in total - each week. UK radio stations are able to broadcast on the long established FM and AM analogue platforms, as well as the newer digital audio broadcasting (DAB) digital radio platform, on digital TV platforms and increasingly via online services such as radio streaming apps.

Digital radio started broadcasting in the UK in the mid-1990s with broadcasts by the BBC, and the first commercial services began with the launch of the Digital One network in 1999. There has been marked progress in the past decade with a steady shift in consumption to digital radio by listeners. Improvements in national and local digital radio network coverage since 2010, together with investment in new digital services by the BBC and commercial broadcasters, and by vehicle manufacturers in fitting digital radios as standard in new cars (95% of new cars as of Q4 2019), have supported the steady take up of digital radio. Over the past three years, listeners have started to use smart speakers to access radio services and other audio.

The latest available figures indicate that each week two thirds (67%) of the population aged 15+ access radio services via a digitally enabled platform (DAB, DTV, online or app). Two thirds (66.7%) own a DAB digital radio set at home, and digital radio’s share of all radio listening is 58.6% (source: RAJAR Q1 2020), up from just 24% in 2010. The continued shift in listening habits over the past decade means that the DAB platform has become the single largest means of consuming radio, now accounting for 40.2% of all UK radio listening (source: RAJAR Q1 2020).

The BBC and commercial radio have made several important improvements to the coverage of their respective DAB networks in the past few years. The BBC’s national digital radio network is the most extensive, and it carries 11 national BBC radio services. Following the completion of phase four of the BBC’s expansion of this network in late 2017, coverage has increased from around 94% to 97% of the UK’s population.

The first digital national commercial radio services started in 1999 with the launch of Digital One (or D1). As a result of a series of improvements to the network’s coverage over the past two decades, the Digital One national DAB network now reaches around 91% of UK homes and substantially matches the footprint of Classic FM, the UK’s only national commercial FM service. As recently as 2013, there were only four digital national commercial radio services broadcasting via the Digital One network, but as radio slowly recovered from the 2008/9 recession, demand for carriage on this platform has increased as digital’s share of all listening has grown. The Digital One network currently has a total of 20 digital radio services, including simulcasts of the 3 national analogue services: Classic FM, Absolute and TalkSport.

The national commercial digital radio offer was further strengthened in 2016, when a second national DAB multiplex (known as D2) was successfully launched by the Sound Digital Ltd Consortium (Bauer, Wireless Group and Arqiva). This was the second time that Ofcom had advertised the licence to operate a second national commercial digital radio multiplex. The licence had been awarded previously in 2007, but the original licensee (the 4 Digital Group consortium led by Channel 4) was unable to develop a viable service and handed back the licence in 2008. The Sound Digital Ltd (D2) network currently reaches around 83% of UK homes, following improvements to its coverage undertaken in 2018, and it carries 20 national commercial radio stations.

In addition to the three national digital radio networks, there is the local DAB tier, which comprises 57 separate licensed local commercial DAB multiplexes each covering an approximately county-sized geographic area. Each local DAB multiplex carries up to 14 commercial radio stations and the relevant BBC local station for the area. DCMS, the BBC and commercial radio operators jointly supported a substantial programme of work between 2015 and 2018 to upgrade the local DAB tier, with 172 new digital transmitters built across the UK and technical improvements at a further 49 sites. As a result of this work, local DAB coverage increased from around 72% of UK homes in 2013 to 91% in 2018.

Finally, there is a new hyper-local tier of small scale DAB multiplexes which have been developed following a successful Ofcom trial. The first small scale DAB multiplex licence awards were made by Ofcom earlier this year.

The general view from across all parts of the UK radio industry is that DAB listening will continue to grow and that DAB will continue to be a significant platform for distributing digital radio services and content for the foreseeable future. Digital radio is popular with UK audiences because it is free and widely available. The platform also supports certain key policy outcomes: enabling the reach of public service broadcasting to audiences and the efficient use of available radio spectrum to broadcast more stations, which provides listeners with more choice of content and caters to a wider range of consumer tastes.

3.2 Multiplex licences

The Broadcasting Act 1996 paved the way for the licensing of digital radio by creating the structure for digital radio multiplex and station licensing, as well as deregulating commercial radio ownership rules to stimulate growth. Commercial digital radio broadcasting services - first licensed by the Radio Authority in 1999 - are now regulated by Ofcom, which issues broadcasting licences setting out the conditions which apply to licence holders.

There are two types of digital radio licence issued by Ofcom: a digital radio multiplex licence for those wishing to provide a multiplex service nationally or for a given local area; and a digital sound programme (DSP) licence for those wishing to provide a digital radio service.

Digital radio services are multiplexed for broadcast and so differ from analogue broadcasting where a single encoded signal is broadcast on an analogue frequency. A multiplex compresses and bundles a number of radio services (and service information) into one frequency and transmits it digitally. The frequency is then decoded by either a digital radio receiver. This technique allows radio broadcasters to use the spectrum allocated to radio more efficiently, giving consumers more choice when listening to digital radio.

Radio multiplex services are provided and licensed in terms of national, local (typically county-wide) and small scale (typically sub-county) coverage. A multiplex licence holder is responsible for arranging the transmission of services and for contracting with radio stations that want carriage.^{[footnote 3]}

3.3 National radio multiplex licences

There are currently three national radio multiplex services: one is operated by the BBC and two by commercial radio. The BBC’s national radio multiplex is regulated under the BBC’s Charter and Agreement and is out of scope of this consultation.

The multiplex licence currently held by Digital One Limited (D1) was first issued by the Radio Authority in November 1999. The licence was awarded to the sole applicant, GWR Group and NTL Broadcast (now part of Arqiva) to form Digital One. In 2008, GCAP (which had absorbed the GWR Group) sold its interest in Digital One to Arqiva. The licence was granted with the possibility of one further renewal of 12 years (as it was issued within six years of the 1996 Broadcasting Act’s commencement). The licence was renewed by Ofcom in 2011 and runs to November 2023.

The multiplex licence currently held by Sound Digital Limited (D2) was advertised by Ofcom in 2014 and awarded to the Sound Digital Limited (SDL) consortium (Arqiva 40%, Bauer 30% and Wireless 30%) in early 2015. SDL launched the national multiplex service in March 2016. The SDL licence currently has no renewal option (since it was issued 18 years after the commencement of the 1996 legislation) and it will expire in March 2028.

3.4 Local commercial DAB radio multiplex licences

All local DAB multiplex licences where local DAB coverage has been built out to Ofcom requirements (which were set in 2013 following an agreement between the BBC, commercial radio broadcasters, Arqiva and DCMS) already have rights to a licence renewal until December 2030 under changes made to the 1996 Broadcasting Act in 2015.^{[footnote 4]}

The new renewal requirements were part of the wider package of investment support by the BBC, commercial radio and the government to provide an incentive for local multiplex licence holders to invest in improving local DAB coverage.^{[footnote 5]}

The relicensing of local DAB multiplex licences is therefore out of scope of this consultation, but the Government will consider whether there is a need for Ofcom to have more flexible powers to further extend local DAB licences in future legislation.

3.5 Small scale DAB multiplex licences

Also out of scope of this consultation are small scale DAB radio multiplex licences. Ofcom has only recently started to issue the first batch of small scale radio multiplex licences. Small scale radio multiplex licences are awarded for an initial 7 year term and have rights to a renewal for a further 5 years.

National Multiplex	Licensee	Regulated Under	Services carried	Expiration
BBC	BBC	BBC Charter and Agreement	11 BBC stations	December 2027
D1 National	Digital One Limited	Ofcom	20 national commercial radio services	November 2023
SDL National (D2)	Sound Digital Limited	Ofcom	20 national commercial radio services	March 2028

3.6 Future of radio

The terms of reference for the joint DCMS and industry Digital Radio and Audio Review were published in February 2020. The Review is looking at options for further coverage improvements to the national and local digital radio networks to inform the long-term distribution strategy for UK radio, and is due to report shortly. Although audio consumption habits are changing, there is a wide consensus across the radio industry that digital radio will continue to be an important platform for distributing content to audiences for the foreseeable future. Broadcast radio will continue to shift from analogue to digital but is likely to remain popular with large groups of listeners because it has the benefits of being free to air, widely available, reliable and secure.

3.7 The need to consult on the national licences

Under existing legislation, Ofcom does not have a power to renew the current national multiplex licences beyond their current expiry dates and would need to offer the licence currently held by Digital One Limited for a 12-year period through an open competition which would need to take place and be completed by summer 2022.

The COVID-19 pandemic has underlined the important role of national commercial radio as a trusted source of news and information for UK audiences as well as in delivering content to entertain. However, the wider economic impacts due to the pandemic have had a significant impact on commercial radio revenues since March 2020, and there are some signs that this may have accelerated some of the disruptive long-term structural changes facing traditional media.

The UK’s digital radio platform is now mature, with DAB / DAB+ accounting for more than 40% of UK radio listening and with close to 70% of UK homes having at least one DAB radio set. The development of digital radio has opened up choice for listeners and it is increasingly the default service for millions of UK motorists following the industry-led shift to install DAB radios as standard in the majority of new cars. It is therefore important that the national commercial DAB networks on which so many listeners rely have clarity about longer-term licensing arrangements and that commercial broadcasters whose services are carried on Digital One and SDL also have clarity at a time when they are facing unprecedented challenges. We are also keen to ensure there is no disruption to the national radio services broadcasting on the Digital One network from any decision to extend licence terms or from Ofcom re-advertising the licence currently held by Digital One Limited in an open competition, hence the need to consider this issue during the course of this year. Since legislative changes will apply to both national commercial radio multiplex licences, we are also using this opportunity to consult on the licence currently held by Sound Digital Limited (due to expire in March 2028).

In light of the impacts of COVID-19 on UK radio, and following requests from some service operators, the government believes there is now a case to review the legislation and consider whether Ofcom should have powers to renew the two national radio multiplex licences. The government also believes it would be useful, at the same time, to consider whether the alignment of the two national commercial radio multiplex licences to expire in either 2035 or in 2030 would be beneficial, and we are interested in hearing views in this regard.

The government is conscious that this would represent a change in radio licensing policy, and that such a change may not be supported by smaller stations and groups who may prefer Ofcom to run a new contest and allow a competition with a new entrant who may be able to offer stations lower costs. On the other hand, there is no guarantee that relicensing Digital One (and in time SDL) - particularly if the licence is held by a single radio group - would lead to lower costs; while renewing the licence currently held by Digital One Limited and owned by Arqiva - who have no interests in radio stations - may be in the best long-term interest of current and future service users who are likely to be from the larger commercial radio groups.

At this stage, the government has not come to a view on the merits of change. Instead, this consultation is seeking views from across the radio industry on whether to legislate to allow for a renewal of licences (and if so, on the benefits and disadvantages of varying the length of renewal of the two licences to align their expiry dates), or whether it would be better for Ofcom to re-advertise the national multiplex licences ahead of their 2023 / 2028 expiry dates via an open competition. This will allow the government to come to a view this year on whether to allow for the licences to be renewed having taken account of all relevant views from this public consultation.

4. Policy options for consultation

We are seeking views, in particular from commercial radio groups and from individual stations on three options: a no change option and two options for reform - a renewal of both national licences to December 2035, or a shorter renewal of both national licences to December 2030. The detailed options are:

• Option 1 (do nothing): allow the two national radio multiplex licences to expire and be re-advertised through an open competition for a 12-year period by Ofcom in accordance with the existing legislation;
• Option 2: amend the Broadcasting Act 1996 to allow a 12-year renewal for the licence currently held by Digital One Limited and a shorter 7-year renewal for the licence currently held by Sound Digital Limited, to align both expiry dates to a common December 2035 date;
• Option 3: amend the Broadcasting Act 1996 to allow a shorter 7-year renewal for the licence currently held by Digital One Limited and a 2-year renewal for the licence currently held by Sound Digital Limited, to align both with the expiry dates of the local DAB multiplex licences in December 2030.

Option 1 (do nothing): allow the national radio multiplex licences to expire and be re-advertised through an open competition for a 12-year period by Ofcom in accordance with the existing legislation.

The national commercial radio (DAB) multiplex licences were not covered by legislative changes made in 2015 to extend local DAB radio multiplex licences as part of the local DAB network expansion programme which was completed between 2015 and 2018. The exclusion of national commercial radio multiplexes meant that, under the existing legislation, Ofcom would need to hold open competitions in 2022 and 2027 to award new licences to operate the existing radio multiplex licences held by Digital One Limited and Sound Digital Limited respectively.

The principal advantage of policy option 1 is that it would allow commercial radio and other organisations to draw together proposals for organising the UK’s main national commercial radio digital transmission network and to submit alternative arrangements to Ofcom through a competitive process. A competition would allow new entrants to bid in doing so, potentially encouraging new investment in long-term improvements to the national networks, such as: the introduction of more DAB+ services (several stations broadcasting on the DAB+ technical standard have been successfully launched on the SDL network and some local radio multiplexes); increasing the number of national stations carried; or securing further increases in the network’s coverage, either at the time when it is relicensed or at some time later in the new licence term.

There are, however, several disadvantages associated with this option. The detrimental consequences on the wider economy stemming from the three pandemic related lockdowns have had a negative impact on commercial radio broadcasters’ advertising and sponsorship revenues - in Q2 2020 total radio revenues declined 46% year-on-year (source: Enders Analysis) - and are likely to have a lasting impact on the appetite amongst service providers for a further build out of DAB coverage given that a switchover before 2030 is now less likely.

In view of the challenging near-term business environment, it is not at all clear that opening up the existing national radio multiplex licences to an open competition would be in the wider interest of the sector or consumers at this time, as it introduces another element of uncertainty for commercial radio to deal with at a time when the sector is struggling with the impact of COVID-19 and the challenges from the shift of listening to online connected audio devices. A competitive bidding process for relicensing national multiplex licences could be disruptive and would have administrative, cost and management time burdens not just for the existing multiplex operator in rebidding for the licence (either themselves or as part of a new consortium) but for the stations that are carried and who would have to review their distribution strategies.There would also be an administrative burden to Ofcom in running a competitive process for the licence(s). There are also other important limitations which may act to lessen any positive impacts.

• Firstly, it is likely the new licence holder would have to use Arqiva’s network services for the majority of sites (or seek Ofcom approval to adopt different sites given the coordination of frequencies). The new operator would therefore have very little scope over costs, and so could only increase revenues by adding services (e.g. by investing in DAB+) or issuing the contract break to raise charges.

• Secondly, there has historically been a low level of interest from any external parties in bidding for either the national or local commercial digital radio multiplex licences. When the SDL national radio multiplex licence was advertised by Ofcom for a second time in 2014, it was only after allowing an extended period for interested parties to consider putting forward an offer that two bids were received from separate consortia. In the event, all of the participants in both of the consortia concerned were from existing commercial radio operators. There was no interest in bidding for the SDL national radio multiplex licence from non-radio organisations.

Under the do-nothing option, following a competition, the licences currently held by Digital One Limited and Sound Digital Limited would be licensed for another 12 years to 2035 and 2040, respectively. In this scenario, the lack of alignment in the expiry dates of the two licences means that there would be no opportunity for Ofcom to review and reorganise the use of radio spectrum by national commercial radio services in response to changes in the sector and to listeners’ audio consumption habits.

Question 1 – What is the likely impact on the commercial radio sector of maintaining the existing policy and allowing national DAB multiplex licences to be opened to competition. What are the benefits to current and future holders of national commercial radio station licences?

Question 2 - What would be the cost, burdens and other impacts for commercial radio in the event that Ofcom had to go through a full open competition for the licence currently held by Digital One Limited (by 2022) and for the licence currently held by Sound Digital Limited (by 2027)? Please give your reasons and provide evidence.

Reform options: Options 2 and 3 - amend the legislation to allow a renewal of the national radio multiplex licences.

Option 2: amend the Broadcasting Act 1996 to allow a 12-year renewal for the licence currently held by Digital One Limited and a shorter 7-year renewal for the licence currently held by Sound Digital Limited, to align both expiry dates to a common December 2035 date.

Option 3: amend the Broadcasting Act 1996 to allow a shorter 7-year renewal for the licence currently held by Digital One Limited and a 2-year renewal for the licence currently held by Sound Digital Limited, to align both with the expiry dates of the local DAB multiplex licences in December 2030.

As described earlier in this consultation, the UK’s commercial radio industry is facing a period of disruption as it seeks to recover from the impacts of COVID-19 on advertising revenues. At the same time, commercial radio faces increased challenges and new competition from online audio content providers such as TuneIn and Spotify, as well as from new smart speaker platforms. To enable commercial radio broadcasters to make long-term planning decisions on radio content distribution, a further period of stability in the operation and licensing of national DAB multiplexes may be beneficial. In this context, the benefits of allowing the national commercial radio multiplex licences to expire and the relicensing to take place through a competition may well be outweighed by the significant cost and disruption to the commercial broadcast radio industry.

Options 2 and 3 would maintain the existing arrangements and in doing so would provide commercial radio broadcasters with a degree of certainty and stability during the post-pandemic recovery period and the confidence to support the continued development of digital radio through investment in new programme content.

Both option 2 and 3 have an important deregulation benefit as they would result in a reduction in the burdens on the industry by removing the significant direct costs and management time associated with the relicensing process and the disruption for stations carried on those networks having to secure carriage with the new operator before November 2023. These two options would also remove an administrative burden on Ofcom, who would otherwise have to run a lengthy licensing process in 2022 and again in 2027.

Options 2 and 3 would require a change to primary legislation and DCMS proposes to take forward any action via a Legislative Reform Order. These types of Order may be used where a burden has been identified which is intended to be removed or reduced. This approach does limit the scope of changes to those areas where a regulatory burden is removed or reduced, and Ministers must be able to certify that the preconditions set out in section 3 of the Legislative and Regulatory Reform Act 2006 (LRRA) are met before an Order is made.

Question 3 - We would welcome views on the advantages and disadvantages to the commercial radio industry of allowing (Option 2) a further 12-year renewal for the national radio multiplex licence currently held by Digital One Limited and a further 7-year renewal for the licence currently held by Sound Digital Limited, both to 2035. Please provide any supporting evidence.

Question 4 - We would welcome views on the advantages and disadvantages to the commercial radio industry of allowing a further 7-year renewal (Option 3) for the national multiplex licence currently held by Digital One Limited and a further 2-year renewal for the licence currently held by Sound Digital Limited, harmonising the expiry dates of both to December 2030 (in line with the end dates of local digital radio multiplexes). Please provide any supporting evidence.

4.1 Overall preference

In this consultation we have set out three options to the relicensing of the national commercial radio multiplexes. We are seeking your view on your overall preferred option:

• Option 1 (do nothing): allow the two national radio multiplex licences to expire and be re-advertised through an open competition for a 12-year period by Ofcom in accordance with the existing legislation;
• Option 2: amend the Broadcasting Act 1996 to allow a 12-year renewal for the licence currently held by Digital One Limited and a shorter 7-year renewal for the licence currently held by Sound Digital Limited, to align both expiry dates to a common December 2035 date;
• Option 3: amend the Broadcasting Act 1996 to allow a shorter 7-year renewal for the licence currently held by Digital One Limited and a 2-year renewal for the licence currently held by Sound Digital Limited, to align both with the expiry dates of the local DAB multiplex licences in December 2030.

Question 5 - Which of the 3 consultation options (set out above) is your preferred approach for the relicensing of the national radio multiplexes and why? Please state your reasons and provide any supporting evidence.

5. Additional considerations

Options 2 and 3 raise wider issues about the process of allowing national licences to be renewed. For example:

• whether there is a need to consider including additional requirements in renewed licences in relation to extending future DAB coverage; and
• whether to regulate aspects of carriage charges on DAB national multiplexes, given that the structure of DAB licensing gives holders of national multiplex licenses the ability to set prices, and that time-limited licences were developed partly as a means of constraining price increases (as they would otherwise risk losing the licence and the ability to operate the multiplex).

5.1 Coverage

The multiplex licences include provisions setting out the area in which the multiplex service must be provided. Section 58(4) of the Broadcasting Act 1996 provides Ofcom with powers to require radio multiplex licensees, when applying for a renewal of a licence, to provide a supplementary technical plan and to notify applicants of requirements that must be met by that plan. In particular, this enables Ofcom to set new technical requirements (including in relation to increasing the coverage area of the licence at some future point during the term of a new licence offered. We are interested in hearing views about whether - in principle – the licences currently held by Digital One Limited and Sound Digital Limited should have coverage requirements over and above those currently achieved as a condition of renewal.

Question 6: We would welcome any views on the future coverage requirements of the multiplexes. Please give your reasons and provide any evidence.

5.2 Level of future carriage fee price rises

Under the current system of DAB licensing, carriage fees for the radio services broadcasting on the national commercial radio multiplexes are negotiated between the broadcasters and the multiplex operators. Charges are contracted for a specific duration, with price based on the level of bit rates used by the service user (the higher the bit rates, the better the sound quality - which feeds into price).

The government has received representations from some commercial radio operators over the past 18 months about the national commercial radio multiplex licences, with some supporting a renewal and others taking a more cautious position, highlighting the risk to smaller radio operators if the national commercial radio multiplex licences are renewed without a competitive process, and what this may mean for future carriage charges on national and on local multiplexes. In light of these representations, the government believes there may be a case for creating mechanisms to limit the level of future carriage fee increases that the national multiplex operators can charge if legislation is changed to allow them to renew licences without a competitive process.

Therefore, we are interested in receiving views about possible approaches to limiting future carriage fee increases charged by the national commercial radio multiplex operators - in particular, whether there is a need for restraints to limit a national radio multiplex licensee’s ability to increase future charges for existing and renewed carriage contracts.

We have identified two possible approaches:

• Option (a): limit future increases in carriage charges to a figure aligned to CPI (but not necessarily equal to CPI) for all carriage agreements in force at the time of the national multiplex licence renewal.
• Option (b): require existing carriage agreements to be renewed on existing terms for the duration of the renewed national multiplex licence.

Under option (a), stations carried on a national commercial radio multiplex at the date of renewal would have the ability to elect to fix prices for the term of their contract or for the duration of the renewed multiplex licence (whichever is longer) subject only to increases for inflation. Eligible stations wanting greater flexibility would be able to decide not to fix charges on the national commercial radio multiplex (it would not apply to other charges - e.g. analogue or local DAB multiplex carriage). An exception would be if network coverage were extended (where stations would need to meet a proportionate share of the cost increase but otherwise protection would continue) or if a station operator changed services (i.e. opting for DAB+), which would end the price protection.

Under option (b), stations would have the ability to elect to renew or extend existing carriage agreements on the same terms for a period up to the end of the extended national multiplex licence . Option (a) provides a clear and transparent model which would arguably provide national commercial broadcasters with future price certainty. The key downside is that the percentage increase would be fixed for the duration of the licences, and that the CPI index may not be appropriate over such a long-timescale.

Option (b), future price increases would reflect existing contractual arrangements and would vary from contract to contract depending on terms. Stations would be protected from future price changes following a renewal of multi[plex licenses and prices could only increase by the rate required in existing contracts.

Of the two approaches we think that option (b) appears to be the most straightforward, as most carriage contracts already contain an allowance for inflation and allow for adjustments to costs in relation to pass through costs or new investment. However, we would welcome views on whether such requirements are needed (given that some national broadcasters already have existing long-term contracts in place).

Question 7 - We would welcome views on whether there is a need for controls on future carriage fees charged by the national commercial DAB network operators on renewal or whether carriage fee increases should be determined by market forces (as now). Please give your reasons and provide any evidence.

6. List of all consultation questions

Question 1 – What is the likely impact on the commercial radio sector of maintaining the existing policy and allowing national DAB multiplex licences to be opened to competition? What are the benefits to current and future holders of national commercial radio station licences?

Question 2 - What would be the cost, burdens and other impacts for commercial radio in the event that Ofcom had to go through a full open competition for the licence currently held by Digital One Limited (by 2022) and the licence currently held by Sound Digital Limited (by 2027)? Please give your reasons and provide evidence.

Question 3 - We would welcome views on the advantages and disadvantages to the commercial radio industry of allowing (Option 2) a further 12-year renewal for the national radio multiplex licence currently held by Digital One Limited and a further 7-year renewal for the licence currently held by Sound Digital Limited, both to 2035. Please provide any supporting evidence.

Question 4 - We would welcome views on the advantages and disadvantages to the commercial radio industry of allowing a further 7-year renewal (Option 3) for the national multiplex licence currently held by Digital One Limited and a further 2-year renewal for the licence currently held by Sound Digital Limited, harmonising the expiry dates of both to December 2030 (in line with the end dates of local digital radio multiplexes). Please provide any supporting evidence.

Question 5 - Which of the 3 consultation options (set out above) is your preferred approach for the relicensing of the national radio multiplexes and why? Please state your reasons and provide any supporting evidence.

Question 6 - We would welcome any views on the future coverage requirements of the multiplexes. Please give your reasons and provide any evidence.

Question 7 - We would welcome views on whether there is a need for controls on future carriage fees charged by the national commercial DAB network operators on renewal or whether carriage fee increases should be determined by market forces (as now). Please give your reasons and provide any evidence.

7. Next steps and how to respond

7.1 Next steps

A summary of responses and the government’s response to this consultation will be published in due course following the closure of the consultation.

This consultation is being made accordance with the terms of the government’s consultation principles. We would welcome views on all aspects of the consultation paper.

If the government subsequently decides to proceed with Option 1 or Option 2, we would amend the relevant legislation by a legislative reform order. Before doing so, we would carry out a second short consultation on the specific proposals as required by section 13 of the Legislative and Regulatory Reform Act 2006.

7.2 How to respond

The consultation period began on 22nd July 2021 and will run until 5pm on Tuesday 14th September. Please ensure that your response reaches us by the closing date. You can contact nationalmultiplexconsultation2021@dcms.gov.uk if you need alternative formats (Braille, audio CD, etc.). Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome. When responding, please state whether you are responding as an individual or representing the views of an organisation, and, where applicable, how the views of members were assembled.

Please email responses to nationalmultiplexconsultation2021@dcms.gov.uk. Due to present remote working arrangements it is difficult for us to accept hard copies of responses but please let us know if you are unable to respond by email.

This consultation covers the United Kingdom. We welcome comments from all stakeholders who may be interested.

The consultation will close at 5pm on Tuesday 14th September 2021.

We are happy to provide a copy of this document in Welsh or alternative accessible formats. If you require a copy in an alternative format, or if you have any questions, ​please contact nationalmultiplexconsultation2021@dcms.gov.uk.

8. Disclosure of responses and data protection

The Department for Digital, Culture, Media and Sport (DCMS), 4th Floor, 100 Parliament Street, London, SW1A 2BQ, is the data controller in respect of any information you provide in your answers. Your personal data is being collected and processed by DCMS, which processes your personal data on the basis of informed consent. We will hold the data you provide for a maximum of 2 years. Further information can be found within the government’s personal information charter.

We will process the names and addresses and email addresses provided by respondents, and information about which organisations respondents belong to, where this is provided. We will also process the information that you provide in relation to your views on the proposed changes contained in the consultation, which may, of course, include commercially sensitive data. When the consultation ends, we will publish a summary of the key points raised on the DCMS website.

This will include a list of the organisations that responded, but not any individual’s personal name, address or other contact details. All responses and personal data will be processed in compliance with the Data Protection Act 2018 and the UK General Data Protection Regulation.

If you want some or all of the information you provide to be treated as confidential or commercially sensitive, it would be helpful if you could clearly identify the relevant information and explain why you consider it confidential or commercially sensitive. Please note that DCMS may be required by law to publish or disclose information provided in response to this consultation in accordance with the access to information regimes: primarily the Freedom of Information Act 2000, the Environmental Information Regulations 2004, the Data Protection Act 2018 and the UK General Data Protection Regulation. If we receive any request to disclose this information, we will take full account of your explanation, but cannot give you an absolute assurance that disclosure will not be made in any particular case. We will not regard an automatic disclaimer generated by your IT system as a relevant request for these purposes.

Once you have submitted your response to the consultation you will not be able to withdraw your answers from the analysis stage. However, under the Data Protection Act 2018 (and the UK General Data Protection Regulation), you have certain rights to access your personal data and have it corrected or erased (in certain circumstances), and you can withdraw your consent to us processing your personal data at any time.

You have the right to lodge a complaint to the Information Commissioner’s Office about our practices, to do so please visit the Information Commissioner’s Office website or contact the Information Commissioner at casework@ico.org.uk or:

Information Commissioner’s Office
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If you need any further information please contact us at dcmsdataprotection@dcms.gov.uk.

1. Q1 2020 Rajar figures. Reporting has been frozen at Q1 2020 until fieldwork can recommence. ↩

2. In the UK digital radio broadcasting mainly uses the Digital Audio Broadcasting (DAB) technical standard. Some services on certain radio multiplexes use the newer DAB+ standard. DAB+ uses more modern audio encoding than DAB and permits more efficient use to be made of multiplex capacity. This means that, for an equivalent sound quality, a DAB+ multiplex can carry more services than a DAB only multiplex. ↩

3. The DAB multiplex licensee holds the Wireless Telegraphy Act licence for use of spectrum. ↩

4. s58ZA(2) of the Broadcasting Act 1996. This change was added by the Broadcasting Act 1996 (Renewal of Local Radio Multiplex Licences) Regulations 2015/904 reg.3 (April 6, 2015) using a time-limited power which expired on 31 December 2015 (s58A(5) of the Broadcasting Act 1996). ↩

5. The terms of the local DAB expansion agreement are set out in the Local DAB Framework Agreement of 9 January 2015. ↩