Speech

Digital Minister's address to the WorldDAB Assembly

Digital Economy Minister Ed Vaizey spoke to the WorldDAB Assembly 2015 on digital radio

Ed Vaizey

Good morning everyone.

Thank you for inviting me to speak today at the WorldDAB General Assembly 2015.

I have had the enormous pleasure and honour of being the Minster responsible for radio in the UK over the last five years.

Radio is a very important part of the UK’s cultural life and is a fundamental part the UK’s creative industries. The UK continues to be a nation of audiophiles.

Despite growing competition for people’s time and the increased range of online music providers, broadcast radio continues to reach around 90% of all UK adults who listen to an astonishing 21 hours of radio each week; and together consume in excess of 1 billion listening hours every week.

The UK’s broadcast radio sector is comprised of stations operated by the BBC, commercial radio companies and very small not for profit community operators. In 2014 UK broadcast radio revenues were £1.22bn in total and around 17,000 people are employed in the sector.

They key to radio’s success and enduring popularity is of course the quality of content available to listeners. In this respect I believe that some of our commercial radio companies and the range and diversity of BBC radio services are truly world class

However, radio is not immune to the changing world. In an age where anyone with a broadband connection can access a wide range of online music services broadcasters have to have something distinctive and appealing to offer to audiences.

Why digital radio?

So I want to explain why I believe the transition digital radio is both necessary and beneficial to radio listeners in the UK.

Digital radio – whether DAB or DAB+ is a huge opportunity for the radio industry and for radio listeners.

If radio is to compete in a fast moving multi-media digital landscape then it must have greater flexibility to grow, innovate and engage with its audience, and in this the limits of analogue, as a distribution platform for radio, are all too evident. AM spectrum is no longer useful. FM spectrum is now full and it simply does not have the capacity to deliver the range of services and functions that digital can.

By comparison, digital offers a number of possibilities for radio to grow. The delivery of new content and functionality connects listeners and radio in new ways, provide gateways to online businesses and open up new revenue streams to the commercial market.

Digital technologies offer broadcasters the scope to compete by creating new brands and services or by extending existing successful brand propositions to appeal to new audiences. Of course the challenge for the radio industry sector is unlocking this potential and I want to go on record to pay tribute to the UK’s world leading commercial radio groups and stations that have been able to do this.

Online is an increasingly important platform for radio and will play a growing role as 4G technologies mature, but I am clear that radio needs its own platform to maintain its simple free to air offer and sustain its relationship with listeners wherever they are. But we must not under estimate the challenge of radio’s transition from analogue to digital. The relationship between radio and listeners is a personal and emotional one.

That’s why I have consistently said over the past five years that the needs and concerns of radio listeners many of whom are satisfied with FM are absolutely central in any plans for a future digital radio switchover in the UK.

We are clear that a digital switchover should only begin when listeners are ready and for that reason we have confirmed – firstly in 2010 and again in 2013 - that Government will only be in a position to consider a decision about the timing and approach to a future switchover when certain criteria on radio listening and on DAB coverage have been met; namely that 50% of all radio listening is to digital and national DAB network coverage is comparable to FM and local DAB network coverage reaches 90% of the population and major roads.

Digital Radio Action Plan – 2010-2013

However, one of my early actions when I came to DCMS was to launch the three-year Digital Radio Action Plan in July 2010. I did this because there was an urgent need for a comprehensive action plan supported by Government, Industry and the UK’s national communications regulator, Ofcom, to support the expansion of digital radio, tackle the barriers to digital migration and to assess the feasibility of a future radio switchover.

When I launched the Action Plan I set out what I believed to be the key barriers to realising radio’s digital future in the UK. These were and are the four Cs: content, coverage, consumers and cars.

Through the Digital Radio Action Plan process industry and Government were able to look at what was needed for a future switchover: * to sort out DAB coverage – in particular local DAB coverage, * bring the car industry to a point where it would make the step change to invest in DAB, * set minimum standards of performance for radio receivers and help reassure consumers, and * find solutions for smaller stations who want to be able to broadcast on the DAB platform.

Following the completion of work on the Action Plan, I set out the Government’s long-term vision of a digital future for radio in December 2013.

I said then that it was too early to set a date for a future radio switchover but was able to announce was a series of measures to support the next phase of digital radio’s development in the UK and that would help us achieve those criteria, potentially in the next few years, in order to build on the positive momentum and progress in the radio industry created by the Action Plan.

Since then thanks to the efforts of radio broadcasters, Ofcom and industry with support from Government here has been considerable progress in pushing further forward on all four Cs. Let me start with content.

Content

There has been a widening of choice and content available to UK listeners on digital in recent years. UK Broadcasters have used additional capacity offered by digital radio to launch new services and extend existing successful brand propositions to appeal to new audiences.

BBC Radio 4 Extra launched in 2011 and uses classic comedy and drama content from sister station Radio 4’s archive. It has become the UK’s most popular digital only station with 2.2m listeners. Since 2013 Bauer Radio has launched two spin offs (Kisstory and KISS Fresh) of its popular urban dance KISS station to appeal to new audiences.

The number of stations available on the UK’s national commercial digital radio network (D1) has increased from four in 2009 to 14 today and the capacity of this network is now totally full.

Many of those stations are doing well, with Absolute 80s being the UK’s leading commercial digital station with more than 1.5 million listeners. In the last few years the new national stations added have covered a range of music genres (Capital Xtra – Dance and urban; Magic – easy listening) and the first national commercial speech based station (LBC).

Due to the demand from commercial operators a second national digital commercial multiplex (D2) will launch next year with plans to carry up to 15 more national commercial stations – further broadening the appeal.

Coverage

As I said earlier, a key barrier for digital radio in the UK has been the level of DAB coverage. This has been a major frustration for listeners.

Government has worked with Ofcom, the BBC and commercial radio industry to overcome this barrier.

In 2013 the BBC announced plans to extend coverage of the BBC’s national DAB network from 93% to 97.3% of UK homes to be completed in early 2016.

There are also improvements with the coverage of the UK’s existing national commercial digital radio network (D1) which broadcasts 14 national commercial stations– with investment by the operator to extend its coverage from around 89% to over 91% of UK homes, also by early 2016.

But the real barrier on coverage has been the UK’s local DAB network, which carries local commercial radio and the BBC’s local services. The roll out of this network has lagged far behind the expansion of the two national DAB networks and it has been much more challenging.

In December 2013 as part of our long term plans for digital radio I announced a significant financial commitment from the Government along with the BBC and commercial operators of local DAB radio multiplexes to support building out the coverage of the local DAB network to match current commercial FM equivalence - i.e. from around 75% of UK homes to more than 90% of households.

In February of this year I was delighted to formally announce the start of the local DAB upgrade programme of work – which is the largest ever expansion of DAB in the UK - to build 182 new local DAB transmitters in England, Scotland, Wales and Northern Ireland and to make modifications to a further 49 existing local DAB sites. As a result of all the work done to upgrade the local DAB network up to and including October an additional 589k UK households and 1,200 km roads are now covered.

The effect of the national and local DAB expansion programmes will be to greatly improve DAB coverage and means that around 8 million more people across the UK will be able to access a wider range of national and local radio services from the BBC and commercial radio on digital. It is also good news for UK motorists who will be able to enjoy an uninterrupted DAB signal on thousands more miles of roads.

Smaller stations

During our deliberations about radio’s future I have been struck by the importance of local radio stations and the passion of those who run them.

I believe local radio – in all its forms has a strong and sustainable future - whether on FM, which we have said will be sustained for smaller stations following a switchover, or on local DAB.

But for some time I have been concerned that small local stations do need a DAB solution that works for them.

For that reason I was pleased to announce in December 2013 that DCMS would provide Ofcom with £500k funding for a major trial of low cost small-scale DAB technology which will open the way for many smaller commercial and community stations to broadcast on a digital platform.

There has been a very positive response from smaller commercial and community stations to this important initiative and Ofcom has commenced 10 technical trials in places across the UK including in Brighton, Cambridge, London and Glasgow carrying a total of 60 smaller commercial and community radio services.

The 10 small-scale DAB trials will complete next year and – subject to a successful technical evaluation – DCMS will be working with Ofcom to bring forward plans to enable these types of services to be licensed.

Peter Davies from Ofcom is speaking later and will give more details about the trial and the scope of this technology to give more flexibility and choice to smaller stations.

Cars

As you all know, one of the more intractable problems with the development of digital radio has been in-vehicle conversions. The car is where 22% of radio listening occurs and digital radio in car is a much better listening experience than analogue.

In 2010 less than 5% of new cars sold in the UK had DAB radios installed as standard and as a result digital listening in cars was below 10%. We decided not to legislate to force UK car manufacturers to adopt digital radio and chose instead to work with the radio industry, motor industry’s trade association the Society of Motor Manufacturers and Traders (SMMT) and UK based vehicle manufacturers to agree a way forward together.

Thanks to the work done by the radio broadcasters’ body - Digital Radio UK - with support from the SMMT, UK vehicle manufacturers have really embraced digital radio and a huge amount of progress has been made with new cars over the past five years.

Yesterday I was able to announce that almost 75% [74.1%] of new cars sold in the UK in September 2015 had DAB radios fitted as standard. Due to the buoyancy of the UK car market, it means 500,000 cars were fitted with DAB radios in the last quarter. That represents a considerable shift since 2010.

We recognise that it will take time for the build-up in the number of new cars with DAB installed to be translated across the entire UK car fleet and to make the desired inroads in the level of in-car digital listening.

We also recognise there remains a considerable challenge in relation to a switchover to digital from the large number of vehicles already on UK roads which still need to be converted to digital radio. This is something that was considered by a cross industry group as part of the Digital Radio Action Plan. There has been good progress in implementing key recommendations by the group on raising awareness about the options available to motorists to enable them to convert to Digital and strengthening the offer to motorists over the past two years.

Digital Radio UK has also worked with the motor industry on introducing an approved installer scheme for cars – so that if a motorist takes the decision to upgrade their car to digital radio, they know that the installer has been trained to fit the equipment.

The UK’s leading aftermarket retailer Halfords plans to train sufficient numbers of staff to ensure they have at least one of their installers at every store. VW and Vauxhall have already signed up as approved dealers, which means the staff in their UK networks of more than 600 dealerships will be trained to fit digital radio.

Consumers

All of this is great news for UK consumers:

  • More choice
  • More coverage
  • More opportunities to upgrade to digital
  • New ways to engage

But to really give consumers confidence, we need them to be sure the radio they buy is right for them.

For that reason I particularly welcome the excellent work done by Digital Radio UK and radio industry in the past two years to develop and introduce the digital radio tick mark scheme for both in-home and in-car digital radio products. These products meet certain minimum technical specifications and performance standards developed by industry through the Digital Radio Action Plan and provide consumers who buy them with the assurance that they will deliver a high quality listening experience.

There has been real progress with the scheme and the majority of digital radio manufacturers have had their products tested and approved to use the tick mark and these products are now available in greater numbers in UK stores for consumers to buy. For example the UK’s leading car aftermarket retailer Halfords launched the digital radio tick mark on their car radio products in April 2015 in over 400 stores nationally, including tick mark point of sales material. Digital Radio UK are working closely with other retailers on the introduction of products in their stores.

DRUK have also had discussions with a range of broadcasters, manufacturers and industry groups in Germany, Norway, Italy, Switzerland, Holland and Poland on overseas use of the tick mark.

Latest position

So good and continued progress.

Thanks to the efforts of broadcasters digital radio listening continues to grow steadily and now stands at around 42% [41.9% - Q3 2015 Rajar] of all radio up by 5% since the last quarter [from 39.9%]. DAB penetration is 57% by household.

Though clearly there is some way to go, the radio industry expects this trend will continue and the 50% listening share level will be reached in the next two to three years.

Digital radio across Europe

I would like to finish with another C, although I sense as a running theme this is beginning to wear a little thin. However, here goes… cooperation.

Digital radio is certainly growing across Europe – particularly with Norway and Switzerland having confirmed plans for a switchover. Germany has successfully launched DAB+ services –reaching 10% household penetration in three years. The German public service broadcasters have announced their intention to build on the progress made – something Willi Steul mentioned earlier.

DCMS has had excellent discussions with the German Federal and State Governments, regulators and ARD to support the progress on digital radio and to explore areas we can collaborate on in terms of knowledge and knowhow. They are very interested to learn from us how to get DAB radio into German cars - this should not be hard as the leading German manufacturers are close to 100% in terms of their UK sales.

DCMS officials have also had meetings with counterparts in France, Germany, Denmark and with the Digital Radio Team in Norway. There is interest in these countries in learning from our experience with digital radio. We are keen to learn from them.

But there is a need for cooperation at EU level. The Digital Single Market is a key priority for the UK. We believe it is has huge potential for driving jobs and growth and safeguarding Europe’s competitiveness across all digital technologies.

That’s why the UK Government’s response to the EU Commission’s consultation on the Audiovisual Media Services Directive suggests to include radio in the Digital Single Market Strategy.

The UK wants to ensure radio remains a distinctive and vibrant medium for citizens and consumers. We have therefore put forward our view that there needs to be more collaboration on digital radio across Europe. This is not about extending competence - regulation of radio services should remain within the competence of national Governments. But the Commission can and should play a greater in supporting the transition to digital radio across Europe by:

  • supporting common technical standards for digital radio – something World DAB is driving forward,
  • encouraging European car manufacturers to install digital radio alongside FM based on common standards, and
  • promote the carriage of European radio services on digital networks – something we are keen in the UK to facilitate.

So to conclude, I remain of the view that Digital is the future for radio in the UK and elsewhere across Europe and that the transition – albeit slow – is the right one to guarantee radio’s future in the 2030s and beyond – this has not changed over the past five years.

Thank you.

Published 9 November 2015