Speech

Speech to Intellect Consumer Electronics Conference

Introduction Thank you to Intellect for inviting me to speak today.  The early twentieth century US President Woodrow Wilson said “if you …

Introduction

Thank you to Intellect for inviting me to speak today. 

The early twentieth century US President Woodrow Wilson said “if you want to make enemies then try to change something”.

Or to quote Lord Fowler from earlier this week digital radio switchover could cause a ‘major row’. 

We must not under estimate the challenge of radio’s transition from analogue to digital.  The relationship between the radio and listeners is a personal and emotional one. 

That is why I would like to make it clear today that the needs and concerns of radio listeners will be absolutely central to our approach to Digital Radio Switchover.

So.

We will not switch over until the vast majority of listeners have voluntarily adopted digital radio over analogue.

We will not switch over to digital until digital coverage matches FM.

And we will not switch off FM, FM will remain a platform for small local and community radio for as long as these services want it.

Nevertheless, it is essential that we maintain the momentum towards digital, and that we start to really pick up the pace and make some real progress.

That means a digital radio Switchover in 2015 remains a target we aspire to, but for which a lot more work needs to be done before we can make it a cast-iron commitment.

Why Digital Radio?

I want to make it clear why I believe that digital radio is both necessary and beneficial to radio listeners in this country. 

Digital radio is a huge opportunity for radio and for radio listeners. 

Britain already leads the world in digital radio.  Three of the leading digital radio manufacturers, Roberts, Pure and Bush, are hugely successful British companies who are already taking their success here abroad.

Some of our commercial radio companies are world-beating, with the potential to become international media companies. 

And of course the BBC’s radio content is some of the best in the world. 

But most importantly of all, consumers in the UK should not be limited, in effect, to eight national radio stations across FM and AM.  If I were to suggest today that TV viewers should go back to five main channels, there would be outrage.  I hope in a few years time, when we approach switchover, radio listeners will see the benefits of multi-channel national radio in exactly the same way that television viewers have seen such benefits.

Perhaps we have already seen a glimpse of this in the public outcry about the proposed closure of 6 Music.

Digital radio is the opportunity to strengthen, to innovate, and to engage.

Digital radio is already a good consumer proposition.  Twenty-four percent of radio listening is already on digital and over 11 million digital radio receivers have been sold.

But it can, and I believe will, be much more. 

The FM spectrum is now full and it simply does not have the capacity to deliver the range of services and functions that digital can.

The Cs

The challenge for us all  is to overcome the remaining barriers and allow people to make the choice to move to digital radio. 

Conveniently, they all begin with a C:

  • Content
  • Coverage
  • Cars

However, there is a fourth C which is even more important:  

Consumers

Consumers, not government, through their listening habits and purchasing decisions will ultimately determine whether a switchover to digital can happen.  The challenge for the radio industry is to drive consumer demand by providing great content.  In this I agree with Lord Fowler’s recent comments that ‘the public have got to be taken with the process’.

Manufacturers and broadcasters will need to work together to launch new stations and add value to existing ones, and to develop new functions which are easy to use and engaging, such as the ability to record and pause programmes, or to download music and other content as you hear it.  

The BBC is central here, because it currently has more than 50% of all radio listening.  The furore and subsequent saving of 6 Music shows that the BBC is already building a fantastic portfolio of digital radio content, which has already established a passionate following, myself included.

So we need more 6 Musics. And not just from the BBC but also from the commercial sector.

But the BBC must not simply provide great digital content.  It must also lead the way in the promotion of digital, across all its platforms, as a medium through which to access all radio 

But great content and promotion is not enough if your digital radio can’t receive a signal.  So coverage is crucial.  Coverage of digital, specifically DAB, has long been understood as a barrier.  However, action to increase coverage has been far too slow. 

There is only so much the commercial sector can do, both in terms of their own financial resources, and their specific commercial needs.  The key to coverage has always been, and remains, again, the BBC.  The BBC has already got us to a position where we have 90 per cent coverage.  But I believe it can do more over the next two years, especially at a local level, even before we begin negotiations on the licence fee. 

In-car, or for the techies amongst you, “in-vehicle digital conversion” is a challenge we did not have to address in the Digital TV Switchover.  However, in radio it is essential.  There has been some significant progress in this area and we believe the inclusion of digital radio in the vast majority of new vehicles is a matter of when, not if.  I intend to meet with the major car manufacturers shortly and will re-affirm our view that digital radio should be standard in all cars by the end of 2013. This is of course only half of the answer.  There are many millions of cars already on the roads and there needs to be an affordable and easy conversion solution.

I believe we should be clear about the scale and complexity of the problem.   There are already some excellent in-car convertors on the market but we should not assume that the market alone will provide the solution for all motorists or vehicles. However, I am confident that such a solution is achievable with a joined up and concerted effort. Fundamentally, it will need integrity and innovation from the manufacturers, many of which are represented here today.  

Related to this will be radios built into mobile phones - or perhaps I should call them cell phones to fit with my C-based approach.  I will be talking to mobile phone manufacturers over the next few months to encourage them to replicate the efforts of the car manufacturers, so that digital radios are available in new phones from the end of 2013.

Myth Busting

Before I give more details of the Action Plan I would like to take a few minutes to address some of the common complaints about digital radio.

First, radio’s digital future will not be delivered by the internet alone; at least not in the immediate future.  There would be massive implications for capacity and energy use if all listeners listened to the radio on the internet.

Instead we believe radio’s future is a mixed ecology, with DAB, which is mobile, free at the point of access and cost efficient providing the ‘spine’ of the digital radio offering and the internet providing the added value.  We have already seen a trend towards the integration of internet and DAB in radio receivers.  We welcome this not least because it allows the listener to decide which platform best suits them.

While on the point of technologies I should say that we believe that DAB remains the most appropriate digital broadcast platform for the UK.  A change in technology, to say DAB+, offers little benefit to the industry or listeners compared to the impact it would have.  The benefits of DAB+ are primarily a more effective use of spectrum, but DAB already offers significant capacity for new services and there are only so many which the market can sustain.  DAB+ offers very little in terms of data services and functionality which can’t also be achieved through DAB.  However, we must protect against any future change and DAB+ must be a feature of future digital radio receivers.

I would like also to tackle the issue of energy consumption.  We have today published independent research, commissioned jointly with the Departments of Environment and Business.  This shows that the difference in energy consumption between digital and analogue radios is minimal - and certainly not the ten, twenty or even hundred times that is often quoted.  The research also shows that energy consumption of digital radios continues to improve.

However, energy consumption of digital radio receivers represents only half of the story.  There are significant energy savings for the transmission networks.  At a national level the transmission provider, Arqiva, believes that transmitting Classic FM via DAB uses less than 7% of the electricity of transmitting the service via FM, while at a local and regional level the energy savings are around 50%.  We believe this is a positive story to tell and we will be conducting more independent research in this area.

Another myth is that, by switching over to digital, we plan to switch off FM.  We do not.  Let me repeat this - we do not intend to switch off FM. 

FM will be available to local listeners as long as is necessary.  There is a fear that when the majority of listeners listen to digital, FM will somehow become a ghetto,.  This will not be the case.  Even today, digital radios allow a relatively seamless transition between digital and FM.  Integrated station guides should, in future, allow the listener to switch seamlessly between their favourite stations, oblivious to whether they are broadcast on digital or FM.

Finally, there is concern about the cost to the consumer of buying new digital radios.  There are more than 130 million FM radios in the country, so this is a big issue.  But consumers are already switching voluntarily, just as they did with television.  The key drivers, as I have said, are content and cost.  A good basic digital radio now costs around £35, and I am confident in the next couple of years the cost will fall.  However, there is clearly a balance to be struck between delivering the innovations needed to build a strong consumer proposition and driving down costs.  It is an issue that many of you here today know better than me.  Initiatives such as the industry’s radio amnesty will help consumers to switch, and I am looking to retailers to come up with innovative schemes to help consumers make the transition as quickly and easily as possible.

Switchover

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

Certainty

We recognise that that for businesses, opportunities also mean risks and that innovation requires investment.  We also acknowledge that uncertainty is not a great incentive for either risk-taking or investment.

That is why today we have published the Digital Radio Action Plan.  The Action Plan reaffirms the Government commitment to a Digital Radio Switchover programme   Key elements of the plan include:

  • a detailed assessment of the impact of switching over to digital radio, including the costs weighed against the benefits, how to ensure rural areas are not left behind and the need for a proper environmental plan
  • agreeing a plan for DAB coverage build-out to match FM
  • devising a kitemarking scheme for digital radio devices underpinned by a set of minimum receiver specifications
  • developing a strategic marketing and communications plan
  • determining the case for a Helpscheme and how it might be implemented

More importantly it sets out for the first time the means under which a switchover date could be set. 

On this point I should be clear.  We agree that 2015 is an appropriate target date; a point at which all parts of the supply-chain can focus on.  If, and it is a big if, the consumer is ready we will support a 2015 switchover date. 

But as I have already said it is the consumer, through their listening habits and purchasing decisions, who will ultimately determine the case for switchover.  Therefore, the target date is secondary to the criteria.  We will only consider implementing a Digital Radio Switchover once at least 50% of all listening is already on digital, or to put it another way when analogue listening is in the minority.  The decision will also be dependent on significant improvements to DAB coverage at a national and local level.

I would like to leave you with a final thought.  This afternoon I chaired my first Ministerial Group meeting for Digital Switchover of Television.  A key element of the success of the TV Switchover programme to date has been to co-ordinate and focus the efforts of broadcasters, transmission providers, manufacturers, consumers and Government.  This will again be essential in the lead up to a Digital Radio Switchover. Therefore, I hope that today represents just the beginning of the dialogue with you all.

Thank you.

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